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Retail FDI Policy

The document summarizes India's retail FDI policy timeline from pre-1991 to 2018. Some key points include: - Modern trade like supermarkets make up less than 10% of retail sales while e-commerce is only 1.6% currently. - Retail FDI policy evolved from allowing 100% FDI in cash and carry wholesale in 1997 to allowing 51% FDI in single-brand retail in 2006 and increasing it to 100% FDI in single-brand and allowing 51% in multi-brand retail in 2012 with certain conditions. - In 2018, new regulations were implemented restricting marketplaces from certain activities to ensure a level playing field for sellers.

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104 views8 pages

Retail FDI Policy

The document summarizes India's retail FDI policy timeline from pre-1991 to 2018. Some key points include: - Modern trade like supermarkets make up less than 10% of retail sales while e-commerce is only 1.6% currently. - Retail FDI policy evolved from allowing 100% FDI in cash and carry wholesale in 1997 to allowing 51% FDI in single-brand retail in 2006 and increasing it to 100% FDI in single-brand and allowing 51% in multi-brand retail in 2012 with certain conditions. - In 2018, new regulations were implemented restricting marketplaces from certain activities to ensure a level playing field for sellers.

Uploaded by

ayushi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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India’s Retail FDI Policy

The Window of
Opportunity
Couple of Retail Basics

• Retail?
• Modern Trade – Traditional Retail? E-commerce?
• Market share?
MT is less than 10% of total retail sales in India: Industry estimates
Online is 1.6% of retail sales in India: World Bank, Dec 2019
Policy Timeline
• Pre-1991 (Pre-liberalization) – Kirana stores, PDS (Fair Price Shops), Cooperative
stores (Government’s chains in 60’s – 70’s)
• Early 1990s (Liberalization era) –
FIPB set up for processing FDI proposals, make recommendations to Government
(abolished in 2017)
DIPP in 1995 for increasing FDI flows in the country (renamed Department for
Promotion of Industry and Internal Trade – DPIIT in 2019) for promotion of retail trade,
welfare of traders and their employees, facilitating ease of doing business and start-
ups, on a request by Confederation of All India Traders - CAIT
• 1997 – FDI upto 100% allowed under the automatic route in Cash and Carry Wholesale
Trading
FDI Policy Timeline
• 2006 (A Policy Milestone)
SBRT – 51% FDI through FIPB route, MBRT – No FDI… APMC Act

• 2012 (A Policy Turning Point)


SBRT – 100% FDI, MBRT – 51% FDI through FIPB route, B2B e-commerce – 100% FDI
automatic route
Clauses for MBRT :
 Minimum amount to be brought in by foreign investor would be USD 100 million
 At least 50% to be invested in back-end infrastructure within three years of induction of FDI
 Minimum 30% of the procurement/sourcing of manufactured/processed products from Small Scale
Industries (units with gross value of investment in Plant & Machinery not exceeding USD 1 million)
 Decision to permit setting up of retail outlets left to the State Governments
 Outlets may be set up in cities with population of more than 1 million (as per 2011 census)
 E-commerce retail trading in any form would not be permissible for companies with FDI in MBRT
FDI Policy Timeline
• 2015 – RAI filed a WRIT petition against the Union of India for removal of MBRT
FDI restrictions imposed on physical-store retailers

• 2016 (Guidelines for FDI in e-commerce) –100% FDI under automatic route in
marketplace model of e-commerce, FDI not permitted in inventory-based
model of e-commerce:
E-commerce entity providing marketplace will not exercise ownership of the inventory
Will not permit more than 25% of sales through its marketplace from one vendor or their group
companies
Will not directly/indirectly influence the sale price of goods and services, shall maintain level
playing field
May provide support services to sellers like warehousing, logistics, order fulfillment, call centre,
payment collection and other services
Post-sales delivery of goods to customers, customer satisfaction will be the responsibility of the
seller
FDI Policy Timeline

• 2018 (Fresh regulations – implemented from Feb 2019)


Marketplace sellers cannot buy more than 25% from a single vendor
Marketplaces will not directly or indirectly give discounts on products
Entities in which there is equity participation by the marketplace entity
cannot sell their products on the platform run by the marketplace
Marketplace entity will not mandate any seller to sell any product
exclusively on its platform only
Marketplaces will have to submit a compliance report to the Reserve
Bank of India (RBI) by 30 September every year.
THANK YOU

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