India's Prime Minster likely to allow FDI in Ecommerce next month

Non-Indian Ecommerce firms may soon rejoice as the Indian government may allow Foreign Direct Investments (FDI) from international companies by next month.

According to reports, India’s newly appointed Prime Minister Narendra Modi is likely to announce the allowance of FDI from foreign firms, giving companies like Amazon the ability to sell directly to Indian consumers, rather than the marketplace model used currently.

The announcement of the decision will most likely be given alongside the new budget. If true, the decision will be the first tangible signs of economic reform by Modi’s business-friendly government.

“Most stakeholders support FDI. We have pitched for opening it up completely,” said a senior government official.

A number of government officials who are privy to the details told news outlet Reuters that allowing FDI and promoting a more vigorous Ecommerce landscape in India would spur local manufacturing and consumption, reviving an economy that saw sub-par expansion these past 2 years.

In December a discussion paper was released by India’s Department of Industrial Policy and Promotion (DIPP) on whether to allow FDI in India or not. The paper had a deadline of January 2014, with a final decision on the matter scheduled for March 2014. Given mixed views on the subject, the paper’s deadline was elongated, and eventually not discussed further.

“The way the government is initiating discussion, it is very clear that they are extremely serious about it. They understand this will help small traders to grow their business, expand and reach out to a larger market,” stated an Ecommerce executive invited to a meeting two weeks ago between the government and foreign and domestic companies.

If approved, foreign firms will be able to tap into India’s $500 billion retail sector, a market currently blocked out to them due to FDI regulations.

SOURCE