India will not allow foreign investment
in business-to-consumer (B2C) ecommerce for the time being to protect
Indian ventures like Flipkart and Snapdeal from global competition, even
as American giant Amazon
asked the government to allow 49% foreign investment in the segment.
There is no grey area in India's ecommerce policy where 100% foreign
direct investment in business-to-business (B2B) transaction is allowed,
said Amitabh Kant, secretary at the Department of Industrial Policy and Promotion (DIPP).
"If you allow FDI in B2C (businesses selling to consumers) today, Indian entrepreneur ventures like Flipkart and Snapdeal will get finished. We will not allow a model that affects Indian companies," said Kant at the Ficci annual general meeting on Friday.
Amazon, which announced a $2-billion investment in India, asked the government on Thursday to allow 49% FDI in ecommerce companies in the first meeting of the interministerial committee set up to fast-track investment proposals from the US. "We needn't replicate the American model. B2B is the way China grew. Alibaba is a result of B2B ecommerce. We have allowed FDI in Flipkart and Snapdeal to grow and prosper," Kant said.
Under the UPA government, DIPP had come out with a paper on the impact of FDI in B2C ecommerce. The new government is examining if opening the sector to foreign investment will create a backdoor entry for FDI in multi-brand retail. The BJP is opposed to FDI in multi-brand retail, but has not reversed the UPA's decision to allow 51% FDI in the sector.
Interestingly, both Flipkart and Snapdeal have substantial foreign holding. Kant said the government is looking to address other concerns of foreign investors.
"There are no fresh taxation issues by MNCs but a lot of legacy cases in relation to withholding tax, retrospective tax and transfer pricing. Fast-track mechanism is needed to set this right as boards of those MNCs do not allow fresh investment in India," said Kant.
"This government will get it right." Speaking at the same function, commerce secretary Rajiv Kher said a call on minimum alternate tax and dividend distribution tax for special economic zones will be taken in the Union budget.
Amazon, which announced a $2-billion investment in India, asked the government on Thursday to allow 49% FDI in ecommerce companies in the first meeting of the interministerial committee set up to fast-track investment proposals from the US. "We needn't replicate the American model. B2B is the way China grew. Alibaba is a result of B2B ecommerce. We have allowed FDI in Flipkart and Snapdeal to grow and prosper," Kant said.
Under the UPA government, DIPP had come out with a paper on the impact of FDI in B2C ecommerce. The new government is examining if opening the sector to foreign investment will create a backdoor entry for FDI in multi-brand retail. The BJP is opposed to FDI in multi-brand retail, but has not reversed the UPA's decision to allow 51% FDI in the sector.
Interestingly, both Flipkart and Snapdeal have substantial foreign holding. Kant said the government is looking to address other concerns of foreign investors.
"There are no fresh taxation issues by MNCs but a lot of legacy cases in relation to withholding tax, retrospective tax and transfer pricing. Fast-track mechanism is needed to set this right as boards of those MNCs do not allow fresh investment in India," said Kant.
"This government will get it right." Speaking at the same function, commerce secretary Rajiv Kher said a call on minimum alternate tax and dividend distribution tax for special economic zones will be taken in the Union budget.
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