According to the Livemint, the Indian government permitted 100% foreign direct investment (FDI) in the marketplace model of e-commerce retailing on Tuesday 29 March, 2016
India has seen fast growth of E-commerce spaces in recent years, which has also led to confusion due to various restrictive laws. Players like Flipkart, Snapdeal, PayTM, Amazon and E Bay have remodeled themselves from time to time in order to meet the compliance requirements in the country. There are various litigations pending in the courts of the country involving the status of these companies as well.
The Department of Industrial Policy and Promotion [DIPP] has now defined “e-commerce”, “inventory-based model” and “market place model”, it is reported.
The marketplace model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
The inventory-based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to consumers directly, according to the guidelines.
While a marketplace model will be B2B model, the inventory based shall be B2C. Any marketplace shall not be allowed to sell more than 25% of the sales from one vendor or their group companies, it reported.
These guidelines are provided to help clarify the regulations for various models of businesses. India already allows 100% FDI in business-to-business (B2B) e-commerce.
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