eBay India managing director Latif Nathani on Tuesday called on commerce and industry minister...
eBay India managing director Latif Nathani on Tuesday called on commerce and industry minister Nirmala Sitharaman. Nathani, however, said he did not discuss foreign direct investment (FDI) in e-commerce.
He said that eBay is a great platform that Indian products can use to gain global exposure as it has over 150 million buyers across 200-plus countries. eBay India is a fully local company and pays taxes in India, he said, adding that it was not seeking any FDI.
In August, Sitharaman had said at the Indian Express Group’s Idea Exchange that “FDI is banned in the multi-brand retail and the same applies to e-commerce also”.
The minister’s clarification came at a time when authorities suspect that many e-commerce firms have structured their business in such a way that foreign capital coming to their wholesale business indirectly supports the retail e-commerce business. Recent reports said some of the leading e-commerce companies are being probed by the Enforcement Directorate for alleged violations of foreign exchange regulations.
FE had reported that several e-commerce firms that operate in the B2C (business-to-consumer) space but whose affiliates in the B2B space have foreign direct investment are likely to be in trouble going by Sitharaman’s statement.
India permits 100% FDI in B2B e-commerce activities (as in wholesale trade) but foreign investment is not allowed in B2C e-commerce companies. But some foreign firms are present in the country through what is called the marketplace model. Under this model, they do not retail any products but offers a platform for consumers to place orders, which are then retailed by domestic retailers. This is perfectly legal.
However, there are some domestic B2C e-commerce companies that also operate through the marketplace model but allegedly use their other FDI-funded ventures in the B2B space for retail sales. The minister’s reiteration of the policy would mean that such companies could face the music.
On Tuesday, commerce and industry ministry officials said in the second Services Conclave, a two-day event beginning Wednesday in the national capital, and an international services exhibition that will be held later this month, will see discussions on e-commerce and ways to make India an e-commerce giant.
“We are hoping to get suggestions on reforms in the regulations on e-commerce and we will consider implementing them as e-commerce is an important area for the country,” an official said.