So this new rule may lead to added pressure on players. A new rule being implemented by the Indian Government will put Amazon and Flipkart in a fix: India has allowed 100% foreign direct investment (FDI) in online retail firms that operate as marketplaces, however, FDI will not be allowed in inventory-based models, where the firm owns the goods that are being sold through its platform. A majority of the large e-commerce firms in India are marketplaces, but they will not be permitted to have over 25% of their sales come from one vendor. The move is part of Prime Minister Narendra Modi’s “Make In India” initiative, which aims at creating an ecosystem for manufacturing companies across India. Furthermore, the rules also state the marketplaces will not be permitted to influence the selling price of goods and services on their platform; online retail in India presently relies on deep discounting. On the other hand, Snapdeal has embraced the rules: unlike the other two it does not have a single large seller.
A new rule being implemented by the Indian Government will put Amazon and Flipkart in a fix: India has allowed 100% foreign direct investment (FDI) in online retail firms that operate as marketplaces, however, FDI will not be allowed in inventory-based models, where the firm owns the goods that are being sold through its platform. A majority of the large e-commerce firms in India are marketplaces, but they will not be permitted to have over 25% of their sales come from one vendor. The move is part of Prime Minister Narendra Modi’s “Make In India” initiative, which aims at creating an ecosystem for manufacturing companies across India. Furthermore, the rules also state the marketplaces will not be permitted to influence the selling price of goods and services on their platform; online retail in India presently relies on deep discounting. On the other hand, Snapdeal has embraced the rules: unlike the other two it does not have a single large seller.