Govt. Speak

  • Govt turns down FDI in retail e-commerce: “Centre wants 'Make in India' to succeed before opening B2C segment”
  • Govt turns down FDI in retail e-commerce: “Centre wants 'Make in India' to succeed before opening B2C segment”

    The Union government has decided not to ease foreign direct investment (FDI) rules for electronic commerce. Minister of State for Commerce and Industry, Nirmala Sitharaman, met executives of Flipkart and Snapdeal and representatives from the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (Ficci), in May’15, to assess the impact of FDI on Indian e-commerce companies. The meeting spawned speculation that the National Democratic Alliance (NDA) government might allow foreign e-commerce companies to operate in India.

    At present, 100 per cent FDI is allowed in business-to-business (B2B) e-commerce, while it is banned in the business-to-consumer (B2C) segment. Besides, there is a 30 per cent local sourcing rule for foreign players.

    Large Indian e-commerce companies like Flipkart and Snapdeal have grown significantly since their inception in 2007 and 2010, respectively. Global e-commerce giants like Amazon can operate in India under the marketplace model. In some cases, foreign players have tied up with local companies to enter the Indian market.

    The NDA government wants the 'Make in India' campaign to be successful before opening up B2C e-commerce to foreign retailers. Besides, Indian industry is not enthusiastic about the move. In a representation to the DIPP, the CII stated foreign companies should be allowed after Indian e-commerce players had acquired the strength to take on the competition. The chamber sought safeguards for Indian companies like local sourcing, privacy, safety against tax evasion and checking e-wastage.

    Published in Business Standard on 10 June 2015

  • Government eases investments norms for NRI by eliminating liability to FDI caps
  • Government eases investments norms for NRI by eliminating liability to FDI caps.

    The Commerce and Industry Ministry declare that Non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps.

    The government reviewed the FDI policy relating to investments by NRIs, PIOs and OCIs & decided to amend the definition of NRIs as contained in the FDI policy and to provide that for the purposes of FDI policy, investment by NRIs will be deemed to be domestic investment at par with the investment made by residents.

    It said NRIs would also include Overseas Citizens of India (OCIs) and Persons of Indian origin (PIOs). Last month, the Cabinet, chaired by Prime Minister Narendra Modi, had cleared these amendments. The decision is expected to result in increased investments across sectors and greater inflow of foreign exchange remittances leading to higher economic growth. The government has also notified increase in FIPB's (Foreign Investment Promotion Board) power to recommend foreign investment proposals of up to Rs 3,000 crore from the earlier Rs 2,000 crore. The Finance Minister would consider the recommendations of FIPB on proposals with a total foreign inflow up to Rs 3,000 crore. Beyond this limit, proposals will go will go to the Cabinet Committee on Economic Affairs for approval.

    Published in ET on 3 June 2015

Programmes Launched by Prime Minister Sh. Narendra Modi Ji