Sharma seeks stakeholders’ views on FDI in e-retailing

Commerce and industry minister Anand Sharma yesterday said the central government is awaiting the views of stakeholders before allowing foreign direct investment in online retailing.

At present, overseas online retailers  are not allowed to offer services directly to retail consumers in India.

India allows 100 per cent FDI in business-to-business (B2B) e-commerce but not in retail trading.

The government will wait for views of all stakeholders before allowing foreign direct investment in e-commerce retailing, Sharma said.

The Department of Industrial Policy and Promotion (DIPP) has come out with a discussion paper giving pros and cons of permitting FDI in the sector, listing advantages and disadvantages of allowing FDI in e-retailing.

According to the discussion paper, FDI in online retailing will boost infrastructure development and spur manufacturing facility but it could also lead to large scale job losses.

It would provide "more responsive order taking and after-sales service to customers and competitive pricing; increased access to buyers/sellers, allow MSMEs and artisans to reach out to customers far beyond their immediate location, both locally within India and abroad."

However, it would be against the spirit of FDI policy in multi-brand retail trading (MBRT). The government has last year permitted 51 per cent FDI in MBRT.

At the same time, it said that as small time kirana stores remain the largest source of employment in the country, "opening of B2C e-commerce on inventory based model is likely to seriously impact these shopkeepers leading to large scale unemployment".

The DIPP had sought public comments on the paper till 30 January.

On whether the government will take decision on this before general elections, Sharma said, "I cannot comment anything on the timing. We have started a process, let it get completed."

Listing the advantages and disadvantages, the discussion paper says that FDI in e-commerce will on the one hand boost infrastructure development and spur manufacturing facility, but on the other it could also lead to large scale job losses.

It would provide "more responsive order taking and after-sales service to customers and competitive pricing; increased access to buyers/sellers, allow MSMEs and artisans to reach out to customers far beyond their immediate location, both locally within India and abroad", the paper says.

However, it would be against the spirit of FDI policy in multi-brand retail trading (MBRT). The government has last year permitted 51 per cent FDI in MBRT.

It also said that as small kirana stores remain the largest source of employment in the country, "opening of B2C e-commerce on an inventory-based model is likely to seriously impact these shopkeepers leading to large scale unemployment".

The DIPP has sought public comments on the paper by 30 January.

India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business-to-business (B2B) e-commerce but not in retail trading.