Indian government’s decision to allow 100% FDI in e-commerce through the automated route in 2016 was a breath of fresh air for a large number of startups in India. It was a welcome move as it enabled 20,000 retailers to find bigger and more sophisticated online platforms to sell their products. Since then the e-commerce industry has evolved and shown rapid growth.
Market trends
Managing partner
India Law Offices
In India, e-commerce is broadly divided between domestic and cross-border, B2B and B2C, marketplace and inventory based and single brand and multi-brand. Technology-based advancements like digital payments, hyper-local logistics,analytics-driven customer engagement and digital advertisements have helped the Indian e-commerce industry to grow at a faster rate. Initiatives by the Indian government such as Digital India, Skill India, Startup India and Make in India have also contributed to the growth of the industry. The Indian e-commerce market is expected to grow to US$200 billion by 2026.
India’s foreign direct investment (FDI) regulations allow 100% FDI in B2B e-commerce business (companies such as Walmart and Alibaba that operate a cash-and-carry business) and in B2C online retail of multi-brand goods and services under the marketplace model like Amazon, Flipkart, Snapdeal and in trading (including e-commerce) of food products manufactured or procured in India. The regulations allows single brand retail trading entities that fulfil the pre-condition of operating brick-and-mortar stores to undertake retail trading through e-commerce subject to local sourcing requirements. It does not allow any FDI in the B2C inventory-based model of e-commerce and in companies that engage in multi-brand retail trading by means of e-commerce.
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Gautam Khurana is the managing partner of India Law Offices.
India Law Offices
D-19 (GF) & D-31, South Extension – 1
New Delhi – 110 049
India
Mumbai | Bengaluru
Contact details
Tel: +91 11 2462 2216 / +91 11 246 2218
Fax: +91 11 2465 4364
Email: g.khurana@indialawoffices.com
