India Likely to Clear FDI In Ecommerce by End of Financial Year: Report

The Indian government may soon put foreign e-commerce companies like Amazon and eBay out of their misery.

The government, which has placed a ban on foreign direct investment in retail e-commerce, has started consulting various stakeholders to open up the sector and is likely to reach a verdict by the end of the financial year, according to a new report which cited official sources.

circular (pdf) by the Department of Industrial Policy and Promotion, said that the latest consolidated FDI policy has been circulated in April 2013 (pdf here) and the next edition is scheduled to be issued on 31 March 2014.

The first edition of the consolidated FDI policy clearly bans FDI in retail e-commerce.

The document, of nearly 120 pages, says:

Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading.

The report says that the government is weighing if it should also open up FDI in e-commerce services, which will have a wider impact.

FDI in Ecommerce: The Story So Far

After returning from the G20 summit in September 2013, the Indian Prime Minister asked ministry of Commerce & Industry to examine if FDI can be allowed into e-commerce.

The country relaxed retail FDI norms in September last year to allow foreign ownership of multi brand retail in India. However, FDI was not allowed in e commerce

American ecommerce giant Amazon has been pushing hard to gain access to the $400 bn Indian retail market.  In February, Amazon’s global Vice President Paul Misener met India’s trade minister Anand Sharma and discussed the creation of a favorable policy environment for Amazon to do business in India. The company recently launched Amazon marketplace in India.

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