India approves foreign investment in e-commerce sector

Reuters: India on Tuesday approved 100% foreign investment in marketplace e-commerce companies, formalising rules for the first time for the multi-billion dollar sector.

After years of protectionist policies, India started opening up its retail sector in 2011 but so far had not laid down explicit rules governing foreign investment in the fast-growing e-commerce segment.

In a notification on Tuesday, India’s Commerce Ministry said it would allow 100% foreign direct investment in marketplace e-commerce companies, which would also be allowed to provide services including warehousing, inventory and payments processing to merchants.

However, the notification said e-commerce companies would not be allowed to influence prices of the goods sold on their website, and that not more than 25% of goods sold can come from a single merchant.

The ministry also said foreign investment in inventory-based e-commerce companies, where goods sold are owned by the online retailer, would still not be allowed.