Revised Norms For FDI In E-commerce – Biggies Forced To Restrcuture
Amazon and Flipkart interalia whose most sales are executed via Single Big Vendor Won’t Be Able to Continue Single Dominant Vendor Model (A Welcome Step for Creating More Openness)
- An e-commerce entity will not permit more than 25% of the sales value on financial year basis affected through its marketplace from one vendor or their group companies
- FDI is not permitted in inventory based model of e-commerce. Inventory based model of e-commerce means- an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. Marketplace based model of e-commerce- means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller
So Now Companies Cannot Simply Hire One Big Vendor and Execute Most Orders via that vendor. This will force companies to invite more vendors on their marketplace and it will indeed help in more wholesome growth of vendors across. We have thumps up and Kudos to this Step of Government !!
Source :- NOTIFICATION No. FEMA. 387/2017-RB dated 9.3.2017
CA Ankit Gulgulia (Jain) | ankitgulgulia@gmail.com
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