Press Information Bureau

Government of India

Ministry of Commerce & Industry

16-March-2016 18:11 IST

Enforcement Directorate conducts investigations under the Foreign Exchange Management Act, 1999 (FEMA) for possible contravention of FDI norms/ policy by various entities as and when any credible information is received in this regard. Based on the outcome of the investigation, appropriate action under the provision of FEMA is taken in such cases.

With a view to promote foreign investment, as per regulations framed under Foreign Exchange Management Act, (FEMA) 1999, FDI up to 100% under the automatic route is permitted in companies engaged in e-commerce provided that such companies would engage in Business to Business (B2B) e-commerce.

Foreign investment in Business to Customer (B2C) e-commerce activities has been opened in a calibrated manner and an entity is permitted to undertake retail trading through e-commerce under the following circumstances:

(i) A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.

(ii) A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

(iii) An Indian manufacturer is permitted to sell its own single brand products through e-commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers.

This information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

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FDI in e commerce permits automatic foreign investment for B2B and conditions B2C retail online sales. Enforcement under FEMA investigates alleged contraventions of FDI norms in e commerce. Regulations permit full foreign investment under the automatic route for Business to Business e commerce. Business to Consumer e commerce is allowed in a calibrated manner: manufacturers may sell domestically produced goods online; single brand retail entities with physical stores may sell online; and Indian investee companies owning a brand may sell their own single brand products online provided they manufacture the requisite majority domestically and source the remainder from domestic manufacturers.