RAI sues Centre, demands parity on FDI in E-commerce
20-05-2015 00:00:00
RAI sues Centre, demands parity on FDI in E-commerce
NEW DELHI: Suffocated and threatened by the booming e-commerce, a.k.a online shopping, India's top brick-and-mortar retailers have dragged the Union government to court, demanding level playing field in FDI norms vis-a-vis ecommerce players, a media report said.

Retailers Association of India (RAI), a top body for retailers, which has well-known brands like Future Group, Shoppers Stop and Reliance Retail, as its members, has moved the Delhi High Court against the Union government, an ET report said.

Top ecommerce players such as Flipkart, Amazon, Jabong, Snapdeal have made major impact on the country's retailing business by offering deep discounts, which affected the sales of brick-and-mortar retailers, they alleged.

While India bars Foreign Direct Investment (FDI) in ecommerce companies selling products directly to consumers, it allows foreign firms to operate ecommerce marketplace through Indian arm or subsidiary company.

"On paper, ecommerce can't have foreign direct investment. However, a whole lot of marketplaces are effectively retailing," said Kumar Rajagopalan, chief executive at Retailers Association of India (RAI). "It is a convenient method of saying they are marketplaces, but they can get as much FDI they want. So there is no level playing field in India," he told ET.

Homegrown players such as Flipkart and Snapdeal have attracted billions of dollars in funding by operating such marketplaces while US-based Amazon.com has set up a fully owned subsidiary here and has pledged to invest $2 billion in India, the media report further said.

Analysts, however, feel that even if India were to create similar policies for both offline and online retailers, physical store operators are unlikely to attract the kind of investor response as ecommerce.

Even though India opened the retail business for global supermarkets in 2012 by allowing them to own up to 51 per cent in local ventures, the showpiece liberalisation policy has been a damp squib due to a number of riders including clearance from state governments, mandatory 30 per cent sourcing from small local vendors and upfront investment of at least $100 million, half of which has to be in back-end infrastructure, the report further added.
-K Ramanathan ram@justransact.com

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