Government may go slow on FDI in e-commerce retail: report

With the political fortunes of the Congress party taking a beating in state assembly elections, the government is unlikely to move forward on the proposal to allow foreign direct investment (FDI) in e-commerce at retail level, according to a source.

At present, 100 per cent foreign direct investment (FDI) is allowed in business-to-business (B2B) e-commerce but not in retail trading.

"The Commerce and Industry Ministry has planned to float a discussion paper on the matter to engage with stakeholders. However, in view of the current political situation, the government is likely to go slow on this," the source said.

The decision to allow a 51 per cent FDI in multi-brand retail, which generated lots of controversies, has not yielded any investment in the sector, the source further said.

This decision was announced in September last year and the ministry has not yet received any proposal from foreign players to open super market stores in the country.

US retail giant Walmart, who was in partnership with Bharti Group, has also ended its joint venture. (Read more)

Congress lost the recent assembly elections in four states - Delhi, Rajasthan and Madhya Pradesh and Chhattisgarh.

The state elections were billed by some as the semifinal before the final battle in the Lok Sabha elections due by April-May 2014.

Meanwhile, Indian IT-ITes industry body Nasscom had favoured FDI in e-commerce in the retail sector, but wants the government to make some amount of local sourcing mandatory.

The Commerce and Industry Ministry has prepared a draft discussion paper on allowing FDI in e-commerce activities, which will also include selling of insurance and shares, besides retail.

Global online retailers such as Amazon.com has sought relaxation in the FDI policy which restricts such companies from offering services directly to retail consumers.

As per the FDI policy for multi-brand retail trading, at least 30 per cent of the value of procurement of manufactured/processed products shall be sourced from Indian 'small industries'.