The FDI policy on e-commerce, first pronounced through Press
Note 2 of 2000, permitted 100% FDI in business to business
("B2B") e-commerce activities. With a
view to clarify the already existing policy framework, after
extensive stakeholder consultations, Press Note 3 was issued by
DIPP in 2016 dated 29 March 2016 ("PN 3 of
2016"). Under the PN 3 of 2016, FDI in e-commerce
sector was permitted under 100% automatic route for entities that
carry out business on B2B basis and function on a marketplace based
model of e-commerce. The marketplace based model of e-commerce was
defined under PN 3 of 2016 to mean providing of information
technology platform by an e-commerce entity on a digital &
electronic network to act as a facilitator between buyer and
seller. Under the aforesaid press note, FDI was not permitted under
automatic route in entities engaged in business to consumer
("B2C") model and in the inventory based
model of e-commerce. Inventory based model of e-commerce
