As FDI is allowed only in B2B e-commerce, it was provided in Press Note 3/2016 that, an e-commerce entity providing marketplace will not, directly or indirectly, influence the sale price of goods or services, which also renders such business as an inventory based model. However, Government continued to receive complaints that certain marketplace platforms were violating the policy by influencing the price of products and indirectly engaging in inventory based model. An e-commerce platform operating an inventory based model does not only violate the FDI policy on e-commerce but also circumvents the FDI policy restrictions on multi-brand retail trading. Therefore, latest Press Note on FDI policy on e-commerce sector was needed to ensure that the rules are not circumvented.
Certain averments suggest that Press Note 3/2016 had covertly allowed multi-brand retail trading. Such a view is completely contrary to the specific provisions of Press Note 3/2016, which unambiguously provided that FDI is not permitted in inventory based model of e-commerce which amounts to multi-brand retail.
Fair, competitive and transparent business practices which are in compliance with law will better protect consumers in both short as well as medium and long term. The present policy does not impose any restriction on the nature of products which can be sold on the marketplace.
Press Note 2/2018 is applicable only to entities which operate a marketplace for e-commerce. FDI in other sectors continue to be governed by the specific provisions pertaining to them. For instance, there is no change in the FDI policy on food product retail trading, which permits 100% FDI under approval route, including through e-commerce, in respect of food products manufactured and/or produced in India.