FDI Current Affairs
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The Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce has clarified that the Foreign Direct Investment (FDI) rules for e-commerce have not allowed foreign investment in the inventory-based model or multi-brand retailing.
Provisions for FDI in e-commerce
The DIPP has clarified on the following provisions:
- FDI is allowed only in the business-to-business (B2B) e-commerce segment and not in the business-to-consumer (B2C) segment which in effect is the multi-brand retail or the inventory-based e-commerce model.
- DIPP further has clarified that through FDI in B2B e-commerce, an e-commerce entity providing marketplace will not, directly or indirectly, influence the sale price of goods or services. If it does so, such renders such business would be rendered as an inventory based model.
The DIPP clarifies that an e-commerce platform operating an inventory based model does not only violate the FDI policy on e-commerce but also circumvents the FDI policy restrictions on multi-brand retail trading.
According to Reserve Bank of India (RBI) data, Mauritius was top source of foreign direct investment (FDI) into India in 2017-18 followed by Singapore. The total FDI in FY 18 stood at $37.36 billion in financial year which was marginal rise over $36.31 billion recorded in the previous fiscal 2016-17.
FDI from Mauritius was $13.41 billion in 2017-18 as against $13.38 billion in previous year. FDI inflows from Singapore rose to $9.27 billion from $6.52 billion. FDI from Netherlands has declined marginally to $2.67 billion as against $3.23 billion.
FDI into manufacturing sector had witnessed substantial decline to $7.06 billion, as against $11.97 billion a year earlier. FDI into communication services had rose to $8.8 billion in 2017-18 from $5.8 billion. The inflows into retail and wholesale trade increased to $4.47 billion as against $2.77 billion.
FDI in financial services too saw rise to $4.07 billion from $3.73 billion in the previous year. These sectors accounted for more than 50% of total FDI of $37.36 billion in 2017-18 reflects global interest in new areas, including online marketplaces and financial technologies.