Foreign Direct Investment Fdi Policy

Decent Essays
Foreign direct investment (“FDI”) in India is regulated under the Foreign Exchange Management Act 1999 (“FEMA”). The Department of Industrial Policy and Promotion (“DIPP”), Ministry of Commerce and Industry, Government of India makes policy pronouncements on FDI through Press Notes and Press Releases which are notified by the Reserve Bank of India (“RBI”) as amendments to Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000. The consolidated FDI policy issued by the DIPP (“FDI Policy”) lays down two entry routes for investment: • Automatic Route where foreign investments do not require prior approval of the government and • Government / Approval Route where prior approval of the…show more content…
In this case the online platform’s clients are various sellers who own the inventory of goods and advertise their goods on the online platform. The ultimate sale of the goods is completed between the third party seller and the end consumer. There are other innovative models which are being adopted to bring in investments into companies engaged in e-commerce or companies which directly or indirectly collaborate with e-commerce businesses such as 1. Investing into companies which are engaged into wholesale trading which owns inventory and maintains online b2b platform. 2. Investing into companies providing technology services (where 100% FDI is allowed under the automatic route) which provide technology related services on an arm’s length basis to e-commerce platforms. While considering any such models, it is important to be in compliance with the FDI Policy. Other conditions 1.) The digital and electronic network will include television channels, computers and other internet application based networks used in automated manner such as webpages, extranets, mobile phones, etc. 2.) Market place e-commerce entity can have transactions with sellers registered on its platform on B2B basis. 3.) E-commerce may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services. 4.) E-commerce entity will not exercise
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