The Centre govt. gave its nod to 100 % foreign direct investment (FDI) in e-commerce through the automatic route in marketplace model of e-commerce retailing.
However, FDI in inventory based model of e-commerce has not been permitted.
Marketplace model of e-commerce retailing:
Information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
Inventory based model of e-commerce retailing:
It is an e-commerce model where inventory of goods and services is owned by e-commerce entity and sold to consumer directly.
Presently 100% FDI is allowed in B2B (business to business) transaction under automatic route.
An e-commerce firm will not be permitted to sell more than 25 % of total sales from one vendor or its group companies. This has been done to ensure a broadcasting of vendors for a true market place.
The move is expected to boost foreign investment in the e-commerce sector.