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New Delhi, Nov 2 (IANS) The Commerce and Industry Ministry is considering a proposal to allow foreign direct investment (FDI) in inventory-based models of e-commerce as part of the government’s strategy to boost exports.
To move forward on the proposal, the ministry has sought feedback from various central government departments on the issue.
Senior officials cite the example of China to highlight the huge potential in promoting exports through e-commerce platforms.
India’s FDI policy allows 100 per cent FDI in the marketplace model of e-commerce under the automatic route, where companies like Amazon and Flipkart act as platforms connecting buyers and sellers, but do not own the inventory.
However, FDI is restricted in the inventory-based model, where the e-commerce entity sells its inventory directly to consumers. While some specific exceptions allow manufacturers to sell their own products and single-brand retailers to operate through e-commerce, the general rule prohibits FDI in direct B2C sales through an inventory-based model.
Commerce and Industry Minister Piyush Goyal has also indicated that the government is considering a proposal to allow e-commerce companies to hold inventory exclusively for exports.
India’s e-commerce exports are growing, the current estimate is around $4-5 billion and the government’s target is $200-300 billion by 2030. Popular export products include fashion apparel, home decor, handicrafts, organic beauty products, toys and electronic goods.
The Foreign Trade Policy 2023 includes a dedicated chapter on e-commerce to outline the roadmap for cross-border trade in the digital economy, reflecting the government’s initiative to promote exports through e-commerce.
The Government has also extended the benefit of rebate in duties and taxes on exported products (RoDTEP) to e-commerce exports including postal and courier routes to improve cost competitiveness.
The government also plans to set up e-commerce export hubs in partnership with the private sector under the foreign trade policy. Additionally, Digital India programs have helped ease online payments and simplify customer verification.
–IANS
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