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E-commerce players pitch for 100% FDI in sector

E-commerce players pitch for 100% FDI in sector
The government on Thursday discussed various issues including taxation related to foreign direct investment in the e-commerce sector with stakeholders such as Flipkart, Snapdeal and industry associations, which pitched for 100 per cent FDI in the sector. After hour-long meeting stakeholders, Commerce and Industry Minister Nirmala Sitharaman said more such discussion will happen with industry representatives and state governments.

“It was the first meeting.... 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,” she told reporters here. At present, 100 per cent FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment. The government is, however, non-committal on tweaking the FDI policy for the e-commerce sector. “After getting the views from all the stakeholders, we will take some decision,” a senior government official said.

Meanwhile, industry chambers demanded 100 per cent FDI in the e-commerce retailing. “The idea is to emphasize that there has to be a parity between online and offline retail policy with respect to FDI levels,” Ficci said in a statement. Representatives of CII, FICCI, NASSCOM, USIBC, <g data-gr-id="60">ebay</g>, Ikea, H&M, Japan Plus, Decathlon, Amazon, and trade body Confederation of All India Traders (CAIT) attended the meeting. Sitharaman said the meeting was to understand the broader context of e-commerce and “the way in which they (industry) need FDI, they may not need FDI. Is it affecting the level-playing field of <g data-gr-id="57">the the</g> brick and mortar stores. All these are being discussed”.

About the meeting with state governments, the minister said issues such as taxation and definition of e-commerce needs to be discussed with them. The Minister said stakeholders have raised issues related to taxation, definition and inclusion of e-commerce within the framework of domestic trade policy. Global players are looking at India because the country is one of the fastest-growing markets in Asia-Pacific, along with China. Rise in Internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops. According to estimates, the sector’s market size in the country is at around USD 5 billion annually. Analysts said online shopping is expanding at a massive rate.

Ficci said that FDI should be allowed in B2C (business-to-consumer) e-commerce, with a focus on sourcing from manufacturers and in a phased manner. However, CAIT said that allowing FDI in the sector will counter the vision of ‘Make in India’ campaign. The Retailers Association of India (RAI) railed against government’s invitation consultation meeting on FDI policy in e-commerce. 

Facing criticism on retail FDI issue, the government today sought to downplay the continuation of the policy permitting 51 per cent FDI in the multi-brand retail sector saying the BJP’s stand remains the same on the matter. On May 12, the government released its latest consolidated FDI policy which has retained previous UPA regime’s decision allowing foreign retailers to open multi-brand stores with 51 per cent ownership. “I have not taken a new policy, I have not taken a new stand other than what my party had won its election on,” Commerce and Industry Minister Nirmala Sitharaman told reporters here.

“There has not been any change in the policy on FDI in multi-brand retail... BJP won the election based on what it had said in its (<g data-gr-id="49">elelction</g>) manifesto,” she said. The BJP in its general election <g data-gr-id="56">manifesto</g> last year had opposed foreign investment in <g data-gr-id="55">multi-brand</g> retail sector. The minister said that there has been no change in FDI policy on multi-brand retail which was brought by previous UPA government through an executive order. “We have not even gone back to look at it or anything of that kind is just what is put into the compendium,” she said. 

Meanwhile, traditional Retailers demand level FDI playing field
The Retailers Association of India (RAI) on Thursday railed against the government’s invitation for stakeholders’ consultation meeting on FDI policy in e-commerce. It took the line that retail business should not be classified based on channels like offline stores and online. The industry body said retailers would not participate in the meeting.

“There should be a <g data-gr-id="84">level-playing</g> field in respect of FDI across different retail formats. It’s our concern that although the outcome of e-commerce and retail in physical world is the same, the treatment meted out by the government of India to the two players in the same market is inequitable,” RAI said in a statement. “The double standard of the government in allowing e-commerce with foreign investment in India while not allowing multi-brand retail in the physical world is discriminatory,” the statement read, quoting RAI CEO Kumar Rajagopalan as saying. The statement further said: “Retailers have decided to not participate in today’s stakeholders consultation meeting on FDI policy on the e-commerce sector called by the Department of Industrial Policy and Promotion (DIPP).”
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