Government Should Not Permit FDI in E-Commerce Retail: CAIT

The government should not allow FDI in e-commerce retail as it would grant back-door entry to foreign players in the multi-brand retail which the ruling BJP has been opposing, retailers body CAIT today said.

"We will take up the issue with the Prime Minister and Finance Minister and request them not to permit foreign players in e-commerce retail in India. The move would adversely impact small traders," CAIT Secretary General Praveen Khandelwal said.

He also said that permitting FDI in e-commerce retailing would be detrimental to the interests of more than 6 crore small shop-owners across the country.

On May 15, Department of Industrial Policy and Promotion (DIPP) Secretary Amitabh Kant had called a meeting of stakeholders, including industry chambers and foreign companies, to discuss the issue. In that meeting, Google, Amazon and Flipkart, among other stakeholders, favoured permitting FDI in e-commerce retailing.

Soon after taking charge, commerce and industry minister Nirmala Sitharaman reaffirmed BJP's stand on FDI in multi-brand retail and had indicated that foreign players will not be allowed to open mega stores in the country as it may adversely impact the small traders and farmers.

India's FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business-to-business (B2B) e-commerce but not in retail trading. In its election manifesto, BJP had said no to FDI in retail.

Multinational players like eBay and Amazon operate in India through the marketplace model but do not have their own warehouses or retail operations.

The Department of Industrial Policy and Promotion (DIPP) has come out with a discussion paper giving pros and cons of permitting FDI in the sector.