FDI in e-commerce to help SMEs

Pushing for introducing foreign direct investment (FDI) in B2C e-commerce, industry bodies and e-commerce firms have said such moves will help SMEs scale up and expand into smaller parts of the country.

Players like Fashionandyou, Yebhi.com and ShopClues along with industry bodies like Nasscom and IAMAI said allowing FDI in business to consumer (B2C) e-commerce will allow smaller firms to raise much-needed finance from international markets to fund expansion.

Currently, India does not allow foreign direct investment (FDI) in business to consumer (B2C) e-commerce. Many international players operate in India through the marketplace model.

While many parties, including industry body CAIT, have contended that allowing FDI in the sector will "cannibalise" brick and mortar retail stores, information technology industry body Nasscom said there is space for both formats to function simultaneously.

"Globally, in countries where e-commerce has been around for 10 years as well, there is little evidence of such an impact. Further, e-commerce will primarily benefit us by connecting and reaching the underserved markets which will help expand the overall market size," it said.

Internet and Mobile Association of India (IAMAI) President Subho Ray added that the sector has huge potential to generate jobs. Besides, it has also helped micro, small and medium- sized businesses to reach out to millions of customers across geographies. E-commerce, especially the marketplace platform, helps them jumpstart their business with minimal investment, he said.