NASSCOM has shared the main challenges in allowing 100 percent foreign direct investment (FDI) in e-commerce marketplaces.
While welcoming DIPP’s guidelines to introduce 100 percent FDI, NASSCOM said this is a clear indication, that the government identifies marketplaces as an electronic intermediary, operating a technology platform to facilitate sales and transactions between independent third party sellers and buyers.
NASSCOM is glad to see the reiteration of FDI policy ‘as is’ on the services sector, and also on sale of services through ecommerce. Add-on services like order fulfillment services that are offered to independent third party sellers on the platform can also be offered such entities.
This will also help in ending certain misinterpretations and confusions occurring in the domain. The government has clarified that the responsibility for products sold will rest solely on the seller, thereby clarifying the intermediary status of such marketplaces.
Challenges
Restricting sales of a vendor to only 25 percent of the sales in the marketplace may prove to be restrictive, more so if the vendor sells high value items. The industry might face difficulties in case of sale of electronic items, where a vendor maybe offering exclusive access to certain items or discounts.
Marketplaces have no control on how a product is priced and only organize ‘sales’ where vendors participate. This offers consumers with a variety of choices and also attractive prices, we hope that such consumer friendly practices similar to ‘sales’ being offered by retailers will not be restricted.
Sanjay Sethi, CEO and co-founder, ShopClues, said 100 percent FDI in e-commerce can attract foreign investments in the country in marketplace format of e-commerce retailing.
It will be beneficial for consumers and will help in supporting the vision of Make in India as well and also create more job opportunities. The clarity of the definition of e-commerce and marketplace model categorically will allow many players (national and international) to enter the industry through marketplace route.
Vivek Gupta, partner, BMR Advisors, said an explicit position from the government on where it stood with reference to e-commerce has been long overdue. The fact that this position has been stated after close to $10 billion have been committed to the sector, networks and businesses worth multiples of that in different business structures already exist on the ground and legal challenges and ED enquiries are in various stages, meant that the government had very little elbow room to really state a policy position.
