Revised Foreign Direct Investment Policy to Rejig the E-Commerce Playing Field in India

Key Points

A revised Foreign Direct Investment (FDI) policy for e-commerce came into effect in India on February 1, 2019. Retailers with significant international investment, such as Flipkart and Amazon’s Indian entity, have been rather apprehensive in the run up to its implementation, and with good reason.

In this report, we outline key aspects of the revised policy and what it means to retailers and consumers in India.

• E-commerce marketplace operators cannot mandate exclusivity — i.e. they cannot ask sellers to sell particular products exclusively on their platforms.
• If an e-commerce marketplace has an equity stake in a retailer, that retailer cannot sell its products on the marketplace.
• A marketplace operator and its group companies that provide services, such as logistics and warehousing, need to provide them on the standardized terms to vendors.