India permits 100 percent FDI in e-commerce market

INVESecomThe government of India is now allowing 100 percent Foreign Direct Investment (FDI) in the market place format of e-commerce retailing, in an attempt to attract more foreign investments.

At present global giants like Amazon and EBay are operating online marketplaces in India while homegrown Flipkart and Snapdeal have foreign investments, even though there were no clear FDI guidelines on various online retail models.

The Department of Industrial Policy and Promotion (DIPP) said a market place entity will now be permitted to enter into transactions with sellers registered on its platform on a business-to-business basis. However an e-commerce firm will not be permitted to sell more than 25 percent of sales affected through its market place from one vendor or their group companies.

DIPP said in order to provide clarity to the policy, guidelines for FDI on the e-commerce sector have been formulated.