Revised Foreign Direct Investment Policy to Rejig the E-Commerce Playing Field in India

Jean-François Ambrosio - 18/02/19

 

Revised Foreign Direct Investment Policy to Rejig the E-Commerce Playing Field in India

 

Key aspects of the revised policy and what it means to retailers and consumers in India :

 

 

• E-commerce marketplace operators cannot mandate exclusivity — i.e. they cannot ask sellers to sell particular products exclusively on their platforms.

 

• If an e-commerce marketplace has an equity stake in a retailer, that retailer cannot sell its products on the marketplace.

 

• A marketplace operator and its group companies that provide services, such as logistics and warehousing, need to provide them on the standardized terms to vendors.

 

• Ecommerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such a vendor are from the marletplace entity or its group companies.

 

As per JP Morgan, Amazon’s total India revenue could be cut abruptly at the end of March 2020 due to the new policy against original estimates. Also, as per the estimates Walmrt owned Flipkart would be forced to remove 25% of products, causing a 40% slowdown in revenues. In addition, Amazon and Walmart-owned Flipkart have asked the government to extend the February 1 deadline to comply with recently announced changes.

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The Tech & Services Department of Business France - Trade & Investment Commission in India informs, advises and assists French companies in their international expansion with India and South Asia. It also helps Indian stakeholders in bridging with French technology and business counterparts as well as guiding them -through our Investment Department- in their potential investment strategy in France.   A key focus on the agenda of the Department is the promotion of the " French Tech " initiative in India which aims at fostering the relations between the French Tech and the India Tech ecosystems; an area where we believe there are strong perspectives for fruitful partnerships.   In order to foster business and technology tie-ups between French and Indian companies, the Department is regularly organizing business delegations of French stakeholders to India, B2B/B2G events as well as individual B2B meetings.

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