India is now a global destination for attracting investment. The e-commerce sector has become one of the most sought- after sectors for investment, for foreign and domestic players. Framing the policy on foreign direct investment (FDI) in various sectors falls within the realm of the Government of India. FDI is regulated by the Department of Industrial Policy and Promotion (DIPP) and the Ministry of Commerce and Industry.
The extent and conditionalities for FDI across sectors in India is governed by the Consolidated Foreign Direct Investment Policy of India (FDI policy) and the Foreign Exchange Management Act, 1999 (FEMA), along with regulations framed under FEMA.
The government introduced a regulatory framework regulating e-commerce in India for the first time in 2000. Press note 2 (2000 series) inter alia permitted FDI up to 100% for e-commerce activities, subject to certain conditions. Such companies were also allowed to engage only in business-to-business (B2B) e-commerce, and not in retail trading.
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KETAN KOTHARI is a director at Khaitan & Co in Mumbai, while SHWETA DWIVEDI is a principal associate at the firm.
VINEET SHINGAL, an associate partner, also contributed to the article.
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