A major push to the FDI in online Marketplaces and what its actually means
In this busy lifestyle, nothing comes as a fresh breath of relief if you can get your desired goods and products at your doorstep without any need to roam here and there for making a purchase. It will actually be a divine feeling and thank God, it is actually possible due to the emergence of numerous online marketplaces and eCommerce stores around the world. Gone are the hard days when customers have to go to each and every shop to purchase a particular product and had to handle multiple shopping bags simultaneously. This eCommerce segment is acting as the “new found love” for shopaholics as it has made shopping a much simplified task than before. The success stories of eCommerce companies like Amazon, eBay, Alibaba, Flipkart, Snapdeal and such others have shown that there is a huge business potential in this business segment. With the changing consumer preferences and business opportunity, numerous foreign investors are pouring their dollars (FDI) in various eCommerce companies for making a quick fortune. Among the global markets, India has emerged as the favorite destination source for eCommerce business given its huge market demand and the economic stability amid global slow down. In a further push in this area, the government of India through guidelines issued by the Department of Industrial Policy and Promotion (DIPP) on 29th March, 2016 has allowed 100 percent foreign direct investment (FDI) in eCommerce marketplace model through automatic route. With this big announcement, the cent percent allowed FDI is applicable for B2B (business- to- business) transactions under the automatic route and is exempted for the inventory based model of eCommerce. Before we scrutinize much about this latest development, Online marketplace model as per the official statement of concerned ministry refers to “An information technology platform by an eCommerce entity which acts as a facilitator between buyer and seller on a digital and electronic network”. Similarly, an inventory based eCommerce model means “An eCommerce activity where eCommerce entity owns the inventory of goods and services and sells their product/services directly”. Now, as per the changed norms, it will be much easier for foreign investors to put their money in this eCommerce business segment but there has been a sense of alertness among