No change in FDI in e-commerce policy for now

Putting the concerns of millions of traders and MSMEs at rest,  Commerce and Industry Minister Nirmala Sitharaman categorically stated ‘no-change’  in Foreign Direct Investment (FDI) policy for e-commerce.
“We want to leverage the technology for promoting Make in India but there are quite a few issues….We are not taking any position this way or that way from the Ministry”, she said while speaking at a stakeholder meeting organized by Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry.
There are conflicting interests in FDI in business-to-consumer segment of e-commerce. On one hand there are e-commerce companies having e-market place models which mirror the physical market place. Such companies allow MSMEs and traders to sell their goods through it such as Flipkart, e-bay, Snapdeal etc.
While on the other hand there are e-retailers like Amazon which are using inventory based models where they buy, store and then sell goods through their own e-platforms.
During the meeting Federation of Indian Micro and Small & Medium Enterprises (FISME) expressed MSMEs’ concerns and said that the inventory based e-commerce model encouraged large scale imports of goods.
FISME has been of the view that FDI in e-commerce in B2C should be conditional and gradual. The Minister was further requested to get a study done to know the facts such as extent of imports by inventory based companies in other large developing countries,  extent of Indian goods currently procured by e-retailers in India and WTO compatible conditions that could be placed on companies as a quid pro quo for giving access to India’s markets.
While NASSCOM, Amazon and a few others lobbied for opening the sector for FDI, large e-retailers using e-marketplace models such as Flipkart, Snapdeal and e-bay warned the government of potential displacement of MSMEs and traders.
Concluding the meeting, Secretary (DIPP) Amitabh Kant said, “We do not want to take measures that encourage large scale imports and we would like to study the issue further.”
Besides the presence of representatives from all the economic ministries, officials were also from CII, FICCI, ASSOCHAM, USIBC, RAI, CAIT, and Japan Plus among others.