Foreign investment policy think tank, Department of Industrial Policy and Promotion (DIPP) is working on fresh guidelines including foreign investment policy in the sector.
According to the Joint Secretary of DIPP, Sri Atul Chaturvedi, the DIPP will address the war between the ecommerce sector and the ‘brick and mortar retailers’ through a new FDI policy in the ecommerce sector.
At the same time, he ruled out extra regulation on the sector in the context of the turf war between the two.
But the real factor that motivates the government to have a look into the existing FDI policy in the sector is the intense competition going at present between various ecommerce companies- domestic and foreign to consolidate their position.
Last week, Commerce Minister Ms Nirmala Sitaraman has convened a meeting of the ecommerce stake holders to discuss the various issues related with FDI in the ecommerce sector.
The meeting has unique importance in the context of incoming consolidation drive in the sector especially with the attempt of Chinese giant –Alibaba’s attempt to enter into the Indian market.
The ecommerce sector is the attraction for many factors. First, its fast and furious growth has attracted many global firms like the Amazon and Alibaba. Besides the sector’s unique FDI rule that there can be 100 percent FDI in Business to Business mode has encouraged ecommerce firms to design market place model.
Alibaba, a late realiser about the potential of the Indian market would like to make its India entry through its mega hit inventory model.
But in his meeting with Jack Ma last year, PM Modi has requested him to use the B2B platform for promoting Indian products in the international market.
The Indian companies though have accepted large volume of foreign money while promoting their venture, are opposing FDI in the sector. On the other hand, the foreign players are arguing for it and expect more clarity about the FDI policy in the sector.