Government to Define ‘Marketplace’ in Upcoming FDI Policy

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At last, the Indian government appears to have plans to issue a definition of ‘marketplace’. This will be done in the foreign direct investment (FDI) policy, which should bring an end to ambiguity relating to online marketplaces. For a few years now, brick-and-mortar stores have been complaining about the ‘illegal’ activities of online commerce. This is because many of the companies have received investment from foreign companies that are not allowed to sell directly to customers.

While e-commerce accounts for only a fraction of sales across the country, physical stores claim that footfalls have reduced, and that this has happened because of online stores. Late last year, the All India Footwear Manufacturers & Retailers Association filed a complaint in the Delhi High Court against online marketplaces alleging FDI violation. The High Court ordered a probe.

The government is likely to rule that e-commerce companies can only receive income from the sellers and not from the sale itself. This should put this matter to rest.

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