DPIIT top brass huddles with etail, retail firms for inputs on FDI policy

Senior officials from the Department for Promotion of Industry and Internal Trade (DPIIT) met with ecommerce and retail executives last week to gather feedback on India’s foreign direct investment (FDI) rules for the sector, said people aware of these discussions.

The talks come at a time when India is negotiating a broader trade deal with the US, which is expected to include talks on the inventory-led model for foreign-funded ecommerce platforms.

The meeting, held on Thursday, included representatives from Reliance, Amazon, Walmart-owned Flipkart, as well as industry bodies such as Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (FICCI).

At the meeting, government officials sought inputs on the FDI rules for single-brand retail trading, multi-brand retail trading, ecommerce, and food products trading, said one of the persons briefed on the deliberations.

“The government has sought recommendations from the industry on easing FDI policies, especially where there are sectoral conditions that entail onerous compliance obligations,” the person said.

A second person said DPIIT officials also sought inputs on ways to rationalise and simplify sectoral policies to ease compliance burden on foreign investors. “There were detailed discussions specifically on single brand and multi brand retail trading…however DPIIT has sought written submissions on FDI in ecommerce from the industry,” this person said.

DPIIT did not respond to queries.

India’s FDI norms currently disallow ecommerce firms with majority foreign ownership from holding inventory. Global companies have long sought changes to this rule. These restrictions do not apply to domestically owned companies such as Tata Group or Reliance Retail.

To get around these curbs, ecommerce firms in the buzzy 10-minute delivery space have been working to change their ownership structure. India’s largest quick commerce platform Blinkit moved to the inventory model from being a marketplace in September after its parent Eternal became a majority Indian-owned entity following a Rs 8,500-crore qualified institutional placement last year.

ET reported earlier that Zepto and Swiggy are also considering such plans. Last year, senior quick commerce executives were quizzed by DPIIT officials to understand if they were complying with India’s foreign investment norms for ecommerce.

In a May interview with ET, Walmart president and CEO Doug McMillon, who was on an India visit at the time, had said that the US-based retail giant would like to have a level-playing field and consistency in policy, wherever it has a presence. McMillon had met Prime Minister Narendra Modi during his trip.

Over the course of India’s trade negotiations with the US, the Trump administration has also been pressing New Delhi to give online retailers full access to the $125-billion ecommerce market.

These discussions have gained steam at a time when Flipkart is also in the process of shifting its domicile back to India, ahead of a planned initial public offering next year. Walmart-owned payments company PhonePe has already made a confidential filing for its public issue.