With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct?
1. They can sell their own goods in addition to offering their platforms as market-places.
2. The degree to which they can own big sellers on their platforms is limited.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

APEDIA

UPSC Prelims

2022 • 05 Jun, 2022 • Paper-1

With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct?
1. They can sell their own goods in addition to offering their platforms as market-places.
2. The degree to which they can own big sellers on their platforms is limited.

Select the correct answer using the code given below:

Correct Answer

(d) Neither 1 nor 2

Statement 1 Analysis: Incorrect. Under India's FDI policy, 100% FDI is permitted under the automatic route only in the 'marketplace model' of e-commerce. Foreig......

💡 Analysis & Explanation

Statement 1 Analysis ▼

Incorrect. Under India's FDI policy, 100% FDI is permitted under the automatic route only in the 'marketplace model' of e-commerce. Foreign firms are strictly prohibited from holding inventory and selling their own goods directly.

Statement 2 Analysis ▼

Incorrect. The regulations prohibit an e-commerce entity from permitting vendors to sell products on its platform if the marketplace entity or its group companies have *any* equity participation in that vendor, not just a 'limited' degree. It is a blanket restriction on equity ownership in sellers.

Conclusion ▼

Both statements violate the stringent provisions of India's FDI rules for e-commerce.

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