Government Permits 100% FDI in Online Marketplaces

The government permitted 100% FDI in the marketplace format of e-commerce retailing with a view to attract more foreign investers. As per the guidelines issued by the Department of Industrial Policy and Promotion (DIPP) on FDI in e-commerce, foreign direct investment (FDI) has not been allowed in inventory-based model of e-commerce. 



Though the clarification comes in the absence of clear FDI guidelines on various online retail models, the online marketplaces in India have already seen large foreign investments by several global players. Presently, global online retailer giants like Amazon and ebay are operating online marketplaces in India while home-grown players like Flipkart and Snapdeal have foreign investments even as there were no clear FDI guidelines on various online retail models. 

Foreign direct investment:

A foreign direct investment (FDI) is an investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation’s stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies.

Department of Industrial Policy & Promotion:

Department of Industrial Policy & Promotion was established in the year 1995, and in the year 2000 Department of Industrial Development was merged with it. It is working under the Ministry of Commerce and Industry, Government of India. This department is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector, keeping in view the national priorities and socio-economic objectives.

Extra Info:
  • Marketplace model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
  • The 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 consumers directly, according to the guidelines.
  • Ministry of Commerce and Industry –  Nirmala Sitharaman

So lets do:
  • Who is the CEO of Sneapdeal?
  • Industrial Policy & Promotion Department comes Under which ministry?
  • Who is the Ministry of Commerce and Industry?



Source – The Hindu

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