Worried over the impact of FDI in e-commerce on domestic manufacturing sector, the Commerce and Industry ministry has called a meeting of different stakeholders, including industry chambers and foreign companies, on Thursday to discuss the issue.
"Besides industry chambers CII and Ficci, representatives of e-commerce firms like Flipkart and Amazon are expected to participate in the meeting on FDI in e-commerce and its impact on manufacturing sector," sources said.
The meeting assumes significance as the Department of Industrial Policy and Promotion (DIPP) came out with a discussion paper in January giving pros and cons of permitting foreign direct investment (FDI) in e-commerce retailing.
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"The government has to look at the issue that if they would allow FDI in e-commerce retailing, it could impact the growth of manufacturing sector and creation of jobs. The manufacturing sector growth is continuously declining," they added.
Representatives from retailer associations and Confederation of All India Traders would also participate in the meeting.
On the discussion paper, the Department of Industrial Policy and Promotion (DIPP) had received about 100 comments from different e-commerce companies and individual experts.
Listing advantages and disadvantages, the discussion paper had said that FDI in e-commerce on one hand will boost infrastructure development and spur manufacturing facility but it could also lead to large scale job losses.
It would allow MSMEs and artisans to reach out to customers far beyond their immediate location, both locally within India and abroad, the paper had said. However, it would be against the spirit of FDI policy in multi-brand retail trading (MBRT).
The government last year permitted 51 per cent FDI in MBRT.
It had also said that as small time kirana stores remain the largest source of employment in the country, "opening of B2C (business-to-consumer) e-commerce on inventory based model is likely to seriously impact these shopkeepers leading to large scale unemployment".
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.
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.
