The business structuring of e-commerce in India has seen many ups and downs in India. Allowing foreign direct investment (FDI) in multi brand retail and regulatory compliances are two of the most crucial areas that any government in India needs to take care of on priority basis. For instance, Flipkart and Myntra are under regulatory scanner these days for possible violation of FDI norms. As on date the e-commerce entrepreneurs in India are not following the Indian regulatory requirements at all and the new government must scrutinise their affairs in very minute details.
As on date, the commerce and industry ministry of India favours 100 per cent FDI in B2C e-commerce sector of India. Even the Supreme Court of India has declared the FDI policy of India in multi brand retail sector to be constitutional.
It is a common perception that the Bharatiya Janata Party (BJP) and its allies are against allowing FDI in multi brand retail sector of India. However, as per media reports, BJP’s prime ministerial candidate Narendra Modi has signalled that if elected, his government need not necessarily reverse the decision to allow FDI in multi-brand retail.
This is a significant indication as many retail outlets and entrepreneurs have to decide their policies and strategies accordingly. For instance, Carrefour is carefully analysing its Indian strategy these days. Similarly, companies like Google, Amazon, Rakuten, Twitter, Facebook, etc are also trying their hands on e-commerce business. However, income tax liability of these companies is still not clear in India and the same must be clarified by the new government immediately.
This should bring relief to foreign retailers, many of whom feared the worst after the BJP unambiguously stated in its manifesto that it was opposed to the decision of the Congress-led United Progressive Alliance allowing foreign investment in supermarkets. “The government is a continuous process. But it is very unfortunate when one political party reverses the decision of another. The country cannot run this way. Mature decisions must be taken”. This was Modi’s reply to a question when he was asked if he would reverse the multi-brand retail decision as promised in his party manifesto.
In its manifesto, the BJP said it would allow FDI across sectors wherever needed for job and asset creation, infrastructure, and acquisition of niche technology and specialized expertise, but not in supermarkets. “The BJP is committed to protecting the interest of small and medium retailers, SMEs and those employed by them,” it added.