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Govt discusses issue of FDI in B2C e-commerce
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SME Times News Bureau | 15 May, 2015
Should India allow foreign equity in its e-commerce space that is
estimated to touch $16 billion this year? This was the topic of
discussion at a meeting held by Commerce Minister Nirmala Sitharaman
with top industry chambers and stakeholders here on Thursday.
No
decisions were taken, even as the domestic industry felt e-commerce was
still a nascent market in India and should be allowed to mature a bit
before foreign giants are given an entry into this fast-growing
business.
"We are not taking any position this way or that way
from the Ministry. We have heard everybody. In fact, this is not going
to be sufficient," Sitharaman said after the meeting, which was
attended, among others, by industry chambers CII, Ficci and Assocham, as
also leading e-commerce players Flipkart and Snapdeal.
"I will
need to hold more meetings with everyone -- individual operators and
association. I may also have meetings with state governments. I have to
understand what position they have taken, since it is important to know
each case -- what is the issue," the minister said.
India
currently allows 100-percent foreign equity in the e-commerce space only
for business-to-business transactions, and not for business-to-consumer
space. But there are some loop holes as well and global giants like
Amazon and e-Bay want clarity in the policy.
Sitharaman said she is also considering meetings with some state governments on the matter.
"I
may have meetings with state governments also to understand how they
have taken a position because it is important for me to know in each of
these cases what is the issue," she said.
The minister said
stakeholders raised issues related to taxation, definition and inclusion
of e-commerce within the framework of the domestic trade policy.
Representatives
from industry organisations CII, Ficci, Nasscom, the Confederation of
All India Traders, and companies such as eBay, Snapdeal, Decathlon,
H&M, and Ikea attended the meeting.
Within the industry, the views were more or less similar -- but for the finer nuances.
"It
is critical to understand that within the e-commerce space there are
two models of operations -- inventory-based and market place," said a
statement from Ficci, adding that allowing foreign equity in both would
put Indian industry on par with other emerging markets.
"As the
policy is reviewed, it is important to focus on development and
encouragement of micro, small and medium enterprises sector, which is
certainly the driving force behind the vision of 'Make in India'. This
should ensure domestic manufacturing gets impetus," it said.
"Ficci
feels that foreign direct investment should be allowed in the B2C
e-commerce, with a focus on sourcing from manufacturers and in a phased
manner. The idea is to emphasize that there has to be a parity between
online and offline retail policy with respect to foreign equity levels."
The Confederation of Indian Industry (CII) was a little more direct.
"While
CII is favourably inclined towards 100 percent foreign equity in
foreign equity in B2C route, the sector should given some time to come
to a level where it can compete globally," the chamber said, adding that
e-commerce in India was at a relatively nascent stage.
Its
recommendations included ensuring a level playing field for all
stakeholders, safeguards to Indian players such as mandatory local
sourcing, privacy, safety against tax-evasion and checking e-wastage and
no differentiation in the policy based on selling models or on the
basis of goods and services.
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