Reactions on India’s New FDI Policy for Ecommerce: Welcomed by Some, Worrisome for Others

It has been some time since the new ecommerce rules were announced by Ministry of Commerce and Industry, and reactions from the industry have started coming in.

The Founder of online marketplace, Mr. Kunal Bahl has welcomed the government move in his tweet yesterday:

.@Snapdeal welcomes updates to FDI policy on e-commerce. Marketplaces are meant for genuine, independent sellers, many of whom are MSMEs. These changes will enable a level playing field for all sellers, helping them leverage the reach of e-commerce. @rabhishek1982 @DIPPGOI— Kunal Bahl (@1kunalbahl) December 26, 2018

Both Flipkart and Amazon have not issued any public statements post the announcement.

In the meanwhile, small ecommerce companies that operate in specific niche segment are worried after the announcement. One of the new rules allows the ecommerce companies to sell only 25% of their inventory through their own portals. For an ecommerce company running on a small scale with 10 sellers, each seller can sell only 25 of his or her 100 products on a platform. The move will be troublesome for many such smaller ecommerce businesses.

When online cashback companies such as were asked about a possible impact of the said policy on their business, Founder of Swati Bhargava clarified that their business model is unlikely to be affected by the move since their cashbacks are in exclusive tie-ups with sellers:

The new policy does not impact @Cashkarocom’s business model. We are a performance marketing channel for brands, part of their digital marketing mix. Cashback we give is from the commission we receive & is applicable on orders from all sellers 👍— Swati Bhargava (@Swats26) December 27, 2018

The new ecommerce rules for FDI are therefore a mixed baggage so far.

It will take some time for companies to decipher the rules, seek clarifications from the government and modify their business models and practices to fit in the new game.

Categories: Business, Ecommerce, FDI, Finance, Investments

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