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ARTICLE · 04 APRIL 2016

Government Clarifies That 100% FDI Is Permitted In B2C e-Commerce Marketplaces

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This Ergo summarises the key aspects of PN3, and its potential impact on the Indian B2C e-commerce industry.

IndiaGovernment, Public Sector
Sharad Moudgal
Sharad Moudgal
Abhiraj Krishna
Abhiraj Krishna
Sanjay Khan Nagra
Sanjay Khan Nagra
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Introduction

In a much awaited move, the Department of Industrial Policy and Promotion issued Press Note 3 (2016 Series) on 29 March 2016 (PN3) to regulate foreign direct investment (FDI) in the thriving business to consumer (B2C) e-commerce sector. This Ergo summarises the key aspects of PN3, and its potential impact on the Indian B2C e-commerce industry.

Key aspects of PN3

  • "e-Commerce" has been defined as "buying and selling of goods and services including digital products over a digital and electronic network". A "digital and electronic network" has been widely defined and includes "any internet applications".
  • It has been clarified that 100% FDI is permitted under the automatic route in "marketplace model of e-commerce". The "marketplace model" has been defined as a model where the e-commerce entity provides an information technology platform on a digital and electronic network to act as a facilitator between buyers and sellers.

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