GUIDELINES FOR FOREIGN DIRECT INVESTMENT (FDI) ON E-COMMERCE
CS DIVYANSHU SAHNI-UPDATES
GUIDELINES FOR FOREIGN DIRECT INVESTMENT (FDI) ON E-COMMERCE
Press Note No 3 (2016 Series)
dated 29th March 2016
issued by DIPP
dated 29th March 2016
issued by DIPP
FDI – E-commerce - FDI up to 100% under automatic
route is permitted in Business to Business (B2B) e-commerce
As per the FDI policy, contained in the `Consolidated FDI
Policy Circular 2015'' (FDI Policy) as amended from time to time, FDI up to
100% under automatic route is permitted in Business to Business (B2B)
e-commerce. No FDI is permitted in Business to Consumer (B2C) e-commerce.
However, FDI in
B2C e-commerce is permitted in following circumstances:
i)
A manufacturer is permitted to sell its products manufactured in India through
e-commerce retail.
ii) A single brand retail
trading entity operating through brick and mortar stores, is permitted to
undertake retail trading through e-commerce.
iii)
An Indian manufacturer is permitted to sell its own single brand products
through e-commerce retail. Indian manufacturer would be the investee company,
which is the owner of the Indian brand and which manufactures in India, in
terms of value, at least 70% of its products in house, and sources, at most 30%
from Indian manufacturers.
2.0 In order to provide clarity to the extant policy,
guidelines for foreign direct investment on e-commerce sector have been
formulated and are enumerated below:
2.1 Definitions
i) E-commerce- E-commerce means buying and selling of
goods and services including digital products over digital & electronic
network.
ii) E-commerce entity- E-commerce entity means a
company incorporated under the Companies Act 1956 or the Companies Act 2013 or
a foreign company covered under section 2 (42) of the Companies Act, 2013 or an
office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999,
owned or controlled by a person resident outside India and conducting the
e-commerce business.
iii) Inventory based model of e-commerce- Inventory
based model of e-commerce means an e-commerce activity where inventory of goods
and services is owned by e-commerce entity and is sold to the consumers
directly.
iv) Marketplace based model of e-commerce- Marketplace
based model of e-commerce means providing of an information technology platform
by an e-commerce entity on a digital & electronic network to act as a
facilitator between buyer and seller.
2.2 Guidelines for
Foreign Direct Investment on e-commerce sector:
i) 100% FDI under automatic route is permitted in
marketplace model of e-commerce.
ii) FDI is not permitted in inventory based model of
e-commerce.
2.3 Other Conditions:
i) Digital & electronic
network will include network of computers, television channels and any other
internet application used in automated manner such as web pages, extranets,
mobiles etc.
ii) Marketplace e-commerce
entity will be permitted to enter into transactions with sellers registered on
its platform on B2B basis.
iii) E-commerce marketplace may
provide support services to sellers in respect of warehousing, logistics, order
fulfillment, call centre, payment collection and other services.
iv) E-commerce entity providing
a marketplace will not exercise ownership over the inventory i.e. goods
purported to be sold. Such an ownership over the inventory will render the
business into inventory based model.
v) An e-commerce entity will
not permit more than 25% of the sales affected through its marketplace from one
vendor or their group companies.
vi) In marketplace model
goods/services made available for sale electronically on website should clearly
provide name, address and other contact details of the seller. Post sales,
delivery of goods to the customers and customer satisfaction will be
responsibility of the seller.
vii) In marketplace model,
payments for sale may be facilitated by the e-commerce entity in conformity
with the guidelines of the Reserve Bank of India.
viii)In marketplace model, any
warrantee/ guarantee of goods and services sold will be responsibility of the
seller.
ix) E-commerce entities
providing marketplace will not directly or indirectly influence the sale price
of goods or services and shall maintain level playing field.
x)
Guidelines on cash and carry wholesale trading as given in para 6.2.16.1.2 of
the FDI Policy will apply on B2B e-commerce.
3.0 Subject to the conditions of FDI policy on
services sector and applicable laws/regulations, security and other
conditionalities, sale of services through e-commerce will be under automatic
route.
Thanks & Regards
CS DIVYANSHU SAHNI
(Company Secretary)
Spice Group
Mob: 9871027426
Mail id: divyanshu.sahni@yahoo.in
GUIDELINES FOR FOREIGN DIRECT INVESTMENT (FDI) ON E-COMMERCE
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