The Department of Industrial Policy and Promotion (DIPP) invited comments on allowing foreign direct investment (FDI) in e-commerce, indicating the government’s intent to open up this segment. The current policy in India does not allow foreign investment in the business of selling via online to consumers. There are no restrictions on FDI in the business-to-business segment. In a discussion paper on ‘e-Commerce in India’, the department has sought views on eight points, including how much FDI could be allowed and on sourcing and the entry route. The department will accept comments on the paper till January 30. It has also sought views on whether to restrict multi-brand online sales by foreign-funded companies to states which allow FDI in multi-brand retail. After the central government changed its policy to allow up to 51% FDI in the multi-brand retail segment, only 12 states have opened their doors to such investments. The discussion paper states that FDI would boost infrastructure development and manufacturing, result in more efficient supply-chain management and reduce costs. However, it cautions that FDI in the sector may lead to multinationals dumping their cheaper products on the market causing a negative impact on the Indian manufacturing sector in general, and to micro, small and medium enterprises in particular. It added that small-time businesses or kirana stores would likely be seriously hurt, leading to large-scale unemployment.  The Confederation of Indian Industry welcomed the move. Investment in the segment will help the e-commerce business which is looking for funds and help local companies to become internationally competitive.

(Economic Times)