NEW DELHI (TIP): The government on Thursday began consultations on FDI in B2C e-commerce amid a sharp divide between Indian and foreign players. While domestic companies such as FLIPKART and Snapdeal opposed FDI during a meeting by commerce and industry minister Nirmala Sitharaman, foreign players such as Amazon and eBay made a strong case for it.
“We have always maintained that opening up this sector to FDI will be good for consumers and Indian businesses as it will allow us to partner with local manufacturers to source products not carried by other sellers on the marketplace, and support the Make in India vision,” said an Amazon India spokesperson.
Around 60 players from the industry, including representatives of Amazon India, Snapdeal, Ikea, Japan Plus, eBay and FLIPKARTattended the meet.
Domestic e-tailing companies fear it will allow global giants such as Amazon to bring its inventory-based model here, which works on the principle of buying goods in bulk at a low price from small businesses and selling them at a discount to consumers. Currently, e-tailers operate through a marketplace model where independent sellers use their websites to reach out to customers.
“FDI in e-commerce will not have a good impact on the Make in India model. It will allow Amazon to squeeze and manipulate small businesses and flood the mar mar Chinese goods. The e-commerce industry has already received around $9 billion FDI. It has created thousands of jobs. What is the point of changing the policy now,” said an executive with a large Indian e-tailing company.
At present, 100% FDI is allowed in B2B e-commerce space, which helps global retailers such as Walmart operate cash-and-carry business. A Snapdeal spokesperson said, “The government must tread this issue with caution to ensure that there is no adverse impact on the growth of MSMEs in the country.”
A CII spokesperson said, “E-commerce in India is at relatively nascent stage and the market is yet to attain full maturity level. While CII is favourably inclined towards 100% FDI in B2C route, the sector should be given some time to come to a level where it can compete globally.”
FLIPKART also flagged tax issues at the meeting, where Sitharaman said it was only the first in a series of consultations and it will take more such meetings to come to a conclusion about FDI in B2C e-commerce.