Government’s move to allow 100% FDI in marketplace e-retailing gives level playing field to brick and mortar stores: PHD Chamber

PHD Chamber of Commerce and Industry welcomes the government’s move to allow 100 per cent foreign direct investment (FDI) in online marketplaces, which will not only give a relief to ecommerce companies but the conditions or clarifications have also given a level playing field to brick-and-mortar rival stores, said Dr. Mahesh Gupta, President, PHD Chamber in a press statement issued here today.

The Chamber also appreciates the Government’s move which has clearly indicated that the e-commerce companies should not offer predatory pricing and only play the role of facilitators said Dr. Mahesh Gupta.

The government has further clarified that FDI has been permitted only in companies following the marketplace model and not the inventory based model. The guideline further says that warranties and after-sales service will be provided by sellers and not the marketplace companies, he said.

Marketplaces can, however, provide support services to sellers such as logistics, warehousing, order fulfillment; call centres, payment collection and other services. They can also engage in transactions with sellers registered on a B2B basis, added Dr Gupta.

Another significant guideline says that no group company or seller on a marketplace can contribute more than 25% of the sales generated on the site, which will encourage transparent pricing in the industry. The move will be beneficial for the sellers as they will be able to get the complete benefit of pricing, he added. 

These guidelines clearly indicate the changing role that e-commerce marketplaces will play in the Indian market, he said.

“It is a major announcement which will pave the way for accelerated growth of the e-commerce as well as retail sector in India”, said Dr. Mahesh Gupta.