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    Case Study 2 - FDI-PolicyCircular-2020-29October2020 - 0

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    Case Study 2 - FDI-PolicyCircular-2020-29October2020 - 0

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    Case Study 2- FDI-PolicyCircular-2020-29October2020_0 (2)

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    Case Study 2 - FDI-PolicyCircular-2020-29October2020 - 0

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    mandeepdhanjal1103
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    49

    (f) A wholesale/cash & carry trader can undertake retail trading, subject to the conditions as
    applicable. An entity undertaking wholesale/cash and carry as well as retail business will
    be mandated to maintain separate books of accounts for these two arms of the business and
    duly audited by the statutory auditors. Conditions of the FDI policy for wholesale/cash
    and carry business and for retail business have to be separately complied with by the
    respective business arms.

    5.2.15.2 E-COMMERCE ACTIVITIES

    Sector/Activity % of Equity/ Entry Route


    FDI Cap
    E-commerce activities 100% Automatic

    5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in
    Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.

    5.2.15.2.2 DEFINITIONS:
    i) E-commerce- E-commerce means buying and selling of goods and services including digital
    products over digital & electronic network.

    ii) E-commerce entity- E-commerce entity means a company incorporated under the
    Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section
    2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in
    section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and
    conducting the e-commerce business.

    iii) Inventory based model of e-commerce- Inventory based model of e-commerce means an
    e-commerce activity where inventory of goods and services is owned by e-commerce entity
    and is sold to the consumers directly.

    iv) Marketplace based model of e-commerce- Marketplace based model of e-commerce


    means providing of an information technology platform by an e-commerce entity on a digital
    & electronic network to act as a facilitator between buyer and seller.

    5.2.15.2.3 GUIDELINES FOR FOREIGN DIRECT INVESTMENT ON E-COMMERCE SECTOR

    i) 100% FDI under automatic route is permitted in marketplace model of e-commerce.

    Consolidated FDI Policy 2020


    Department for Promotion of Industry and Internal Trade
    50

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

    5.2.15.2.4 OTHER CONDITIONS

    i) Digital & electronic network will include network of computers, television channels and
    any other internet application used in automated manner such as web pages, extranets,
    mobiles etc.

    ii) Marketplace e-commerce entity will be permitted to enter into transactions with sellers
    registered on its platform on B2B basis.

    iii)E-commerce marketplace may provide support services to sellers in respect of


    warehousing, logistics, order fulfillment, call centre, payment collection and other services.

    iv) E-commerce entity providing a marketplace will not exercise ownership or control over
    the inventory i.e. goods purported to be sold. Such an ownership or control over the
    inventory will render the business into inventory-based model. Inventory of a vendor will
    be deemed to be controlled by e-commerce marketplace entity if more than 25% of
    purchases of such vendor are from the marketplace entity or its group companies.

    v) An entity having equity participation by e-commerce marketplace entity or its group


    companies, or having control on its inventory by e-commerce marketplace entity or its
    group companies, will not be permitted to sell its products on the platform run by such
    marketplace entity.

    vi) In marketplace model goods/services made available for sale electronically on website
    should clearly provide name, address and other contact details of the seller. Post sales,
    delivery of goods to the customers and customer satisfaction will be responsibility of the
    seller.

    vii) In marketplace model, payments for sale may be facilitated by the e-commerce entity in
    conformity with the guidelines of the Reserve Bank of India.

    viii) In marketplace model, any warrantee/ guarantee of goods and services sold will be
    responsibility of the seller.

    ix) E-commerce entities providing marketplace will not directly or indirectly influence
    the sale price of goods or services and shall maintain level playing field. Services
    should be provided by e-commerce marketplace entity or other entities in which e-
    commerce marketplace entity has direct or indirect equity participation or common

    Consolidated FDI Policy 2020


    Department for Promotion of Industry and Internal Trade
    51

    control, to vendors on the platform at arm's length and in a fair and non--
    discriminatory manner. Such services will include but not limited to fulfilment,
    logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back
    provided by group companies of marketplace entity to buyers shall be fair and non-
    discriminatory. For the purposes of this clause, provision of services to any vendor on
    such terms which are not made available to other vendors in similar circumstances
    will be deemed unfair and discriminatory.

    x) Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 above will
    apply on B2B e-commerce.

    xi) e-commerce marketplace entity will not mandate any seller to sell any product
    exclusively on its platform only.

    xii) E-commerce marketplace entity with FDI shall have to obtain and maintain a report
    of statutory auditor by 30th of September every year for the preceding financial year
    confirming compliance of the e-commerce guidelines.

    Subject to the conditions of FDI policy on services sector and applicable laws/regulations,
    security and other conditionalities, sale of services through e-commerce will be under
    automatic route.

    5.2.15.3 SINGLE BRAND PRODUCT RETAIL TRADING

    Sector/Activity % of Equity/ Entry Route


    FDI Cap

    Single Brand Product Retail Trading 100% Automatic

    (1) Foreign Investment in Single Brand product retail trading is aimed at attracting
    investments in production and marketing, improving the availability of such goods for the
    consumer, encouraging increased sourcing of goods from India, and enhancing
    competitiveness of Indian enterprises through access to global designs, technologies and
    management practices.

    (2) FDI in Single Brand product retail trading would be subject to the following conditions:

    (a) Products to be sold should be of a ‘Single Brand’ only.

    Consolidated FDI Policy 2020


    Department for Promotion of Industry and Internal Trade

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