The Indian government is still circulating their discussion paper on FDI regulations, and has already been receiving mixed opinions.
A government official told the Indian press, the paper is not only on whether FDI should be allowed, but has raised the idea of creating investment caps from foreign firms. The paper was posted on the Department of Industrial Policy and Promotion’s (DIPP) website, to be discussed and viewed. Pros and cons of partial or full investments were presented. The discussion created mixed responses, mainly regarding concerns for local retailers, and shops.
Indian traders dismissed the Department of Industrial Policy and Promotion’s (DIPP) proposal to allow FDI. The traders claim such investments from foreign firms can be destructive to the local industry, and eventually lead to unemployment. Smaller Indian business located in rural areas would not be able to compete with Ecommerce giants like Amazon.in who are extending their local presence in those areas.
“There is a fear that small shops would be impacted due to the massive reach of e-commerce companies which have the capacity to reach far-flung areas. Displacement of small stores is a big challenge,” an Indian official stated to local press.
51% as opposed to 100% investments are what is being discussed. The FDI regulations received a revision in 2012 allowing for 51% investments in Multi-brand retail. These regulations however have are restricted geographically, a restriction hard to implement in Ecommerce.
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“Multi-brand retail policy is a geographically restrictive one. We have asked if e-commerce should also be restrictive in nature.”
The final decision to the discussion paper has a deadline of January 28th. Whatever is decided will be implemented before March 2014, prior to the local parliament elections.
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