ARTICLE · 12 FEBRUARY 2019

Significant Clarifications/Changes In FDI In e-commerce

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FDI is not permitted in such inventory-based model of e-commerce.

IndiaGovernment, Public Sector

The Department of industrial Policy and Promotion, through Press Note no. 2 of 2018, has sent out significant 'clarifications' on regulation relating to Foreign Direct Investment (FDI) in e-commerce sector.

Just to outline, there are two models of e-commerce activities viz:

Inventory based model-where inventory of goods and services is owned by the e-commerce entity and is sold to the customers directly. FDI is not permitted in such inventory-based model of e-commerce.

Marketplace based model-where the e-commerce entity provides only information technology platform on a digital and electronic network to act as a facilitator between buyer and seller. 100% FDI is permitted under automatic route under this model, subject to certain conditions.

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