E-commerce players are for FDI in retailing: DIPP

Google, Amazon and Flipkart, among other stakeholders, favoured permitting FDI in e-commerce retailing in today's meeting convened by the DIPP, a senior government official said.
Concerned over the possible impact of FDI in e-commerce on the domestic manufacturing sector, the Department of Industrial Policy and Promotion (DIPP) has called a meeting of stakeholders, including industry chambers and foreign companies to discuss the issue.
"Most of the players were of the opinion that the government should permit FDI in e-commerce retailing. They said they are facing two major challenges in terms of shortage of capital and inventory management and for that they said they want FDI," a senior DIPP official, who attended the meeting said.

The official said the DIPP would hold another round of meeting with stakeholders and appraise the new commerce and industry minister of their views.
"The main objective of today's meeting was to firm up steps to boost demand and encourage manufacturing sector," the official added.
However, a few players like the Confederation of All India Traders (CAIT) strongly objected the view to permit FDI in e-commerce retailing.

"The move would jeopardise about 6 crore traders in the country. They will come on the roads. We oppose any kind of such move. FDI in the sector would kill manufacturing sector in the country," CAIT Secretary General Praveen Khandelwal told reporters after the meeting.

The official said a few companies stated that mandatory domestic sourcing clause should be imposed on the foreign e-commerce firm.
"Companies like Flipkart are already sourcing about 65 per cent of their products domestically and Amazon is sourcing about 90 per cent, so that is not an issue," the official said, adding the ministry would include views of all the firms while making any kind of move on the matter.
"We have to see that if we open the sector, how we can give thrust to domestic manufacturing. To grow bigger and large they want FDI," the official said.
The DIPP came out with a discussion paper in January giving pros and cons of permitting foreign direct investment (FDI) in e-commerce retailing.

India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business-to-business (B2B) e-commerce but not in retail trading.
36 Representatives from 36 associations and companies including retailer associations, industry chamber (CII and Ficci), exporters body FIEO, Walmart, KPMG and Yebhi.Com participated in the meeting.
Manufacturing, which constitutes over 75 per cent of the index, declined 1.2 per cent in March against growth of 4.3 per cent a year earlier.
During 2013-14, the sector's output contracted 0.8 per cent compared with 1.3 per cent growth in FY13.