A major push to the FDI in online marketplaces and what its actually means


In this busy lifestyle, nothing comes as a fresh breath of relief if you can get your desired goods and products at your doorstep without any need to roam here and there for making a purchase. It will actually be a divine feeling and thank God, it is actually possible due to the emergence of numerous online marketplaces and eCommerce stores around the world. Gone are the hard days when customers have to go to each and every shop to purchase a particular product and had to handle multiple shopping bags simultaneously. This eCommerce segment is acting as the “new found love” for shopaholics as it has made shopping a much simplified task than before. The success stories of eCommerce companies like Amazon, eBay, Alibaba, Flipkart, Snapdeal and such others have shown that there is a huge business potential in this business segment.

With the changing consumer preferences and business opportunity, numerous foreign investors are pouring their dollars (FDI) in various eCommerce companies for making a quick fortune. Among the global markets, India has emerged as the favorite destination source for eCommerce business given its huge market demand and the economic stability amid global slow down. In a further push in this area, the government of India through guidelines issued by the Department of Industrial Policy and Promotion (DIPP) on 29th March, 2016 has allowed 100 percent foreign direct investment (FDI) in eCommerce marketplace model through automatic route. With this big announcement, the cent percent allowed FDI is applicable for B2B (business- to- business) transactions under the automatic route and is exempted for the inventory based model of eCommerce.

Before we scrutinize much about this latest development, Online marketplace model as per the official statement of concerned ministry refers to “An information technology platform by an eCommerce entity which acts as a facilitator between buyer and seller on a digital and  electronic network”. Similarly, an inventory based eCommerce model means “An eCommerce activity where eCommerce entity owns the inventory of goods and services and sells their product/services directly”.

Now, as per the changed norms, it will be much easier for foreign investors to put their money in this eCommerce business segment but there has been a sense of alertness among various eCommerce companies due to the limitation of cap of 25% for the vendors that are selling their products on eCommerce marketplace stores. Further, this sector has attracted maximum FDI in the previous year of 2015 and remains a key promising business segment in the many more years to come. With the growth in online marketplaces, there is a generation of around 20 million jobs in the country by year 2020 as per the estimate of Gurcharan Das, an eminent author, commentator and former CEO of Procter & Gamble India. Apart from this, this sector is expected to see a growth of around $19 billion in sales with an involved seller community of 1.3 million in the same time period. Considering these crucial statistical figures, you need to think seriously about venturing into this business area.

This is definitely the “Now or Never” kind of business scenario and you would not like to miss this business opportunity with the current changing market scenario. It is the most opportune moment for you to enter into this eCommerce business segment by availing the exceptional eCommerce marketplace development services of a reputed company. If you are not having any idea about one, we will recommend you to avail the unmatched services of Knowband which specializes in the eCommerce plugin development services. With our feature packed eCommerce marketplace module, you can effortlessly turn your eCommerce store into an online marketplace for grabbing the most in this present changing business scenario. Get in touch with us and we will ensure that you are prepared enough to make your mark in this promising business segment with the support of our exceptional workforce, global business exposure and technical know how.

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Joe Parker

We boast of the best in the industry plugins for eCommerce systems and has years of experience working with eCommerce websites. We provide best plugins for platforms like - Magento, Prestashop, OpenCart and Shopify. We also provide custom module development and customization services for the website and modules.

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