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Government permits selective 100 per cent FDI in e-commerce

The government permitted 100 per cent Foreign Direct Investment in the market place format of e-commerce retailing in order to attract more foreign investments.

Department of Industrial Policy and Promotion (DIPP) has permitted guarded permission for FDI in e-commerce:

  • The government had given a further boost to the e-commerce sector by opening up FDI in the business to customer (B2C) segment in a calibrated manner.
  • However, FDI has not been allowed in inventory-based model of e-commerce.
  • A market place entity will be permitted to enter into transactions with sellers registered on its platform on business-to-business basis. The government has already allowed 100 per cent FDI in business-to-business (B2B) e-commerce.
  • E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. However, such entities will not exercise ownership over the inventory.
  • However, an e-commerce firm will not be permitted to sell more than 25 per cent of the sales affected through its market place from one vendor or their group companies.

What is e-commerce?

E-commerce refers to the business transactions through electronic means, including the internet, telephones, televisions and computers. It includes

  • Buying and selling of goods and services, or
  • Transfer of funds or data.

E-commerce in India

In India, the e-commerce is governed by Information Technology Act, 2000.

These business transactions occur either on

  • Business-to-business,
  • Business-to-consumer,
  • Consumer-to-consumer or
  • Consumer-to-business.

E- Commerce is conducted using a variety of applications, such as

  • Email
  • Fax
  • Mobile commerce
  • Electronic fund transfer
  • Electronic data interchange
  • File transfer protocol
  • Web service
  • Supply chain management
  • Internet marketing
  • Automated data collection system

 Advantages of e- commerce

  1. Advantages for Customers
  • Convenience
  • Time saving
  • Easy to compare
  • Easy to find reviews
  1. Advantages for Businesses
  • Increasing customer base
  • Rise in sales
  • 24/7, 365 days business
  • Expand business reach
  • Recurring payments made easy
  • Instant transactions

Disadvantages of e-Commerce 

  1. Disadvantages for Customers
  • Privacy and security
  • Quality
  • Hidden costs
  • Delay in receiving goods
  • Need access to internet
  • Lack of personal interaction
  1. Disadvantages for Businesses
  • Security issues
  • Credit card issues
  • Extra expense and expertise for e-commerce infrastructure
  • Needs for expanded reverse logistics
  • Sufficient internet service
  • Constant upkeep
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