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Online sale of imported goods hangs in balance

Experts say allowing foreign manufacturers to sell directly through e-commerce will give a positive message to MNC manufacturing in India

Anusha Soni  |  New Delhi 

Even as foreign direct investment in did not get the green signal in the maiden Budget of the Narendra Modi-led government, the move to allow foreign to directly sell goods online is being seen as a positive step for the sector. Many argue it is one of the first steps in opening the sector, which has experienced notable growth in recent times.

Analysts say that key players in the electronics segment such as Samsung, LG, and will benefit as most of them currently sell through intermediaries or franchisee. Even the online portals of most electronics that manufacture or assemble in India are managed by third parties as the existing regulations prohibited them from selling directly to consumers.

However, experts say imported products will fall outside the ambit of this eased norm, and the sector is seeking clarification on who exactly will gain from this announcement and whether there will be a distinction between in India and abroad. The Budget speech does not make it clear.

"What does one mean by Will it also cover products which are assembled in India?" asked Gaurav Gupta, senior director, "I think products like air-conditioners and television which are assembled in India should be allowed to be sold online but the finished imported products will fall in the grey area."

don't have a clear picture yet on whether selling online would reduce prices of products. However, allowing foreign manufacturers to sell directly through will give a positive message to the multi-national in India, according to Manish Sharma, managing director, India. "The supply chain will be eased out, the cost of inventory will come down and it will enhance the credibility of to the consumers," said Sharma. The company plans to launch its online retail platform soon.

Leading player Amazon refused to comment on whether it will consider its own range of products such as Amazon-branded tablets or phones. The company, however, said the government's move is a positive statement of intent for the sector. "Following this statement, we are hopeful of a more positive and liberalised policy on in the near future aimed to help grow the industry," said a company statement.

players rule out any price war online because of this development. "It's only the internal arrangement which will change. Already, electronic manufacturers have a problem with price under-cutting by players," said a prominent e-retailer.

"This is a step-by-step journey and we hope that the sector continues to open and evolve in the future," said Pravin Sinha, founder and CEO, Jabong, another company.

Currently, foreign such as Amazon or eBay cannot hold inventory and sell products online under the FDI regulations in Experts say imported products will fall outside the ambit of this eased norm.

First Published: Sat, July 12 2014. 00:47 IST