Relaxing the FDI policy in 2012 in the trading sector, the cap on foreign equity in single brand retail trade (SBRT) was removed, thereby allowing 100% foreign ownership and FDI up to 51% was allowed in MBRT with the objectives of attracting foreign investment in production and marketing, improving availability of products and encouraging competitiveness among Indian enterprises. It also allowed 100% FDI in e-commerce with the restriction that the companies can engage only in Business-to-Business (B2B) e-commerce activities and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to ecommerce as well. India’s FDI policy does not allow FDI in retail e-commerce activities, that is, Business-to-Consumer (B2C) e-commerce activities. Companies could engage only in B2Be‐commerce and not in retail trading, that is, B2C e-commerce. E-commerce activities are allowed 100% FDI cap with automatic equity entry route.
FDI has been specifically excluded from the retail e-commerce sector. It was stipulated that retail trading, by means of e-commerce, would not be permissible for companies engaged in the activity of SBRT or MBRT. The extant FDI policy does not permit FDI in B2C e-commerce.
Single brand retail trading is allowed 100% FDI, up to 49% through the automatic route and beyond 49% through the government route. Multi brand retail trading is allowed 51% FDI through the government route.
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