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Wednesday, March 30, 2016

E-retail gets 100% FDI but with riders

The government on Tuesday allowed foreign investors to pick up 100 percent stake in local e-commerce firms that only provide a platform to other sellers, but put some restrictions on their business models regarding who can sell on this platform. The curbs imposed while opening up the sector have come in for praise from organised retailers, which have been fighting legal battles against online retail format.

Rules were silent till now on foreign direct investment (FDI) in e-retail companies that run on marketplace model, under which owners of the digital platform only facilitate sales and not sell their own products. Rules, however, expressly prohibited foreign investment in companies that were selling their own products online. This restriction remains and is in line with the FDI rules for multi-brand retail.

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