Is e-commerce predatory pricing coming to an end?

According to a joint study done by ASSOCHAM-PwC, India’s e-commerce industry is likely to cross $100 billion during the course of next five years from the current value of about $25 billion, thereby clocking a compounded annual growth rate (CAGR) of 35-40 per cent. However, a set of rules released by the government on Tuesday that put forward certain clarifications in which foreign direct investment can enter the e-commerce industry can have a big impact on it. This is because these rules also take a hard look at the corporate structuring of the online retail sector and the impact that deep discounts have had on India’s traditional retail market.

In the FDI policy, while the Department of Industrial Promotion and Policy (DIPP) has allowed 100% foreign direct investment (FDI) in the B2B e-commerce model, it has not permitted any FDI in Business to Consumer (B2C) e-commerce model. However, FDI in B2C is permitted in following circumstances –

1. A manufacture is permitted to sell its products manufactured in India through e-commerce retail
2. A single brand retail trading entity operating through brick and mortar stores is permitted to undertake retail trading through e-commerce
3. An Indian manufacturer is permitted to sell ites own single brand products through e-commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and manufactures in India, in terms of value, at least 70% of its products in-house and sources at most 30% from Indian manufacturers...Read more