Why the debate on e-commerce must move beyond FDI rules

Authors: Anita Gurumurthy and Nandini Chami

This article first appeared in Hindustan Times on January 6, 2019. The views are of the individual authors.

In October and November 2018, during the Great Indian Festival season in India, online retail giants — Amazon, Flipkart and Paytm Mall — sold goods worth $4.3 billion (Rs 29,947 crore), 43% higher than the last year. 

Traders in physical retail must now reckon with the rather disconcerting reality of e-commerce. The press note issued by the Government of India on December 26 as a ‘review’ of the Foreign Direct Investment (FDI) in e-commerce policy was received positively by a large section of domestic traders/retailers. The relief, perhaps, is too little, too late. 

India’s FDI in e-commerce policy permits only the ‘marketplace model’, where the e-commerce entity is only a facilitator between the buyer and the seller, and not the ‘inventory model’, where the inventory of goods and services is owned by the e-commerce entity and sold directly to consumers. However, foreign companies operating online retail platforms have been flouting the rules all along. 

Read the full article here.