Are e-commerce & direct selling a part of wholesale or retail trade?

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Arpita Mukherjee :  Nov 13 2012, 03:38 IST
The government in September 2012 notified one of the most widely debated FDI policies: the policy of allowing 51% FDI in multi-brand retail. Through another notification the government amended the existing policy of allowing 100% FDI in single-brand retail. In both the policies, an additional clause prohibiting retail trade through e-commerce portals has been added. This leads to the broader question of how the government is going to treat different non-store retail formats such as e-retailing and direct selling. Are they part of wholesale trade or retail trade? As of now, companies in both the direct selling and e-commerce sector are allowed to undertake wholesale activities where only B2B trade is permitted. They are not allowed to do B2C transactions.

As the retail sector in India is evolving, it is likely that different non-store retail formats will evolve and grow. Easier access to credit card facilities and convenience of getting the product delivered at home or workplace have made these a growing component of retail trade. E-commerce and other non-store retail formats like direct selling have grown at an average rate of over 20% in the past few years and have successfully penetrated into smaller cities. A number of Indian entrepreneurs such as the Future Group have ventured into e-commerce. Since FDI is allowed in non-store retail formats through the wholesale sale, cash and carry route and other routes like test-marketing and own-manufacturing, foreign companies have invested in these segments. For example, in direct selling, companies such as Amway, Avon, Oriflame

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