Allow FDI in B2C e-commerce, urge SMEs to Modi

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SME Times News Bureau | 26 May, 2014
The online small and mesium enterprises (SMEs) in B2C (business-to-consumers) e-marketplace like Yebhi.com and Fashionandyou.com has urged the new government for allowing foreign investment in smaller B2C e-commerce firms to help them compete better with Chinese firms, reports media.

The group, consisting of mostly first generation entrepreneurs, said this will enable inflow of foreign capital, expertise and knowledge to propel the industry into its next phase of growth.

It would also allow small and medium e-commerce players to source directly from SME producers and manufacturers, they added.

Fashionandyou CEO Aasheesh Mediratta expressed hope that the new government will view e-commerce with a "different prism than the previous administration".

"We strongly appeal to Mr Modi and his government to review the current policy on FDI and enable it for B2C (business-to-consumers) e-commerce so that the industry can scale global heights like its Chinese and other emerging market counterparts," he told a leading news agency (PTI).

The group has also submitted their responses to DIPP in the discussion paper taken out recently by the Ministry on the issue of FDI in B2C e-commerce.

"The Indian e-commerce industry is in dire need of capital. India has the potential to become one of the largest markets for e-commerce. By restricting entry of foreign capital, technology and expertise, government is scuttling the growth of the industry," Yebhi.Com CEO Manmohan Agarwal said.

He added that liberalisation in the sector could see hundreds of millions of dollars in investments.

"It would help in the creation of a more transparent funding structure for domestic players and offer easier access to capital. This is especially critical for the local players who are mainly first generation entrepreneurs," Agarwal said.

The industry is open to the proposal for up to 51 percent automatic route for FDI in B2C e-commerce, he added.

E-commerce in India has witnessed strong growth in India, increasing from USD 3.8 billion (Rs 19,249 crore) in 2009 to USD 9.5 billion (Rs 47,349 crore) in 2012, the group said adding that the industry is expected to contribute around four percent to the GDP by 2020.

Also, growth in e-commerce will have a spillover effect on associated industries like logistics, online advertising, media and IT/ ITeS, Mediratta said.

Citing an example, he said e-Commerce accounts for about 15-20 percent of the total revenues for some of the big logistics companies.

Currently, FDI policies in India restrict e-commerce companies from offering services directly to retail consumers and 100 percent FDI is allowed only in business-to-business (B2B) e-commerce.