Review of the policy on Foreign Direct Investment (FDI) in e-commerce

FDI in e commerce limited to marketplace model under automatic route; inventory based FDI prohibited and strict control conditions imposed.

The policy permits 100% FDI under the automatic route only in marketplace models and prohibits FDI in inventory based e commerce; e commerce entities must operate on a B2B basis, not B2C. Marketplace entities must not own or control vendor inventory (control is deemed if over 25% of a vendor's purchases are from the marketplace or its group), must not influence sale prices, must provide vendor services on an arm's length, fair and non discriminatory basis, and must ensure payments conform with Reserve Bank guidelines. Entities with equity participation by the marketplace or its group cannot sell on the same platform.