Single Brand Retail Trading A tale to harmonise NDI Rules with the FDI Policy

In an attempt to liberalise retail trading in India, the Government of India (“GoI”) has introduced intermittent reforms in the past decade, with a view to make the sector investor friendly and to ensure that India remains an attractive investment destination from the Foreign Direct Investment (“FDI”) perspective. The measures introduced have enabled foreign players to set up brick and mortar stores and operate in the e-commerce space to facilitate the transformation of the retail landscape in India.
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India’s Foreign Investment Policy on E-commerce Retail

The Indian government has been striving to effectively regulate India’s e-commerce retail market, since its first attempt in 2000. The regulations have been a by-product of the fear of organised global retail with deep pockets adversely affecting scores of unorganised “mom-and-pop shops” and retailers. The Indian foreign direct investment policy on e-commerce retail has been amended several times, and the e-commerce business houses operating in India have restructured themselves to fall in line with every such change in policy without significantly altering their operations.

In the latest episode of this ongoing saga, the Government of India issued a Press Note No. 2 (2018 Series) on December 28, 2018, to effectively legislate against e-commerce entities that disguise their inventory-based business models[1] as marketplaces[2]. Reportedly[3], Walmart-backed Flipkart and Amazon India are undergoing complex structuring and restructuring to align themselves with the amended policy. This to and fro between the Government and e-commerce players has not only been unproductive for the country’s economy, but is also against this Government’s stated objective of certainty and Ease of Doing Business in India. While the effective implementation of the regulations governing e-commerce retail continues to be a significant issue, there are certain other fundamental concerns relating to the approach of the Indian government towards e-commerce retail, which require immediate consideration.    
Continue Reading India’s Foreign Investment Policy on E-commerce Retail: Is the time ripe for a reworking?