DIPP to stimulate foreign investment in ecommerce through higher FDI cap

Wednesday 21 May 2014 00:32 CET | News

India’s Department of Industrial Policy and Promotion (DIPP) has revealed plans to push for a higher FDI cap in ecommerce as part of the department’s strategy to stimulate foreign investment.

Even though India allows 100% foreign direct investment (FDI) in business-to-business (B2B) ecommerce, FDI in business-to-consumer (B2C) ecommerce remains strictly prohibited and bound by FDI restrictions on the retail sector more generally.

This forces retailers such as Amazon and eBay to establish a ‘marketplace model’, where local independent merchants sell goods directly to consumers, and the platform earns commission from those merchants.

Currently, 12 Indian states permit investment in multi-brand retail by foreign companies. However, nation-wide FDI in multi-brand retail only accounts for 51%.

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Keywords: DIPP, foreign investment, ecommerce, FDI cap
Categories: Payments & Commerce
Countries: World
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