Union Budget 2014: Arun Jaitley’s announcement on FDI in e-commerce to create healthy competition, says PWC

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In his Union Budget speech, Finance Minister Arun Jaitley announced that manufacturers will soon be able to sell products on e-commerce platforms without any additional approvals. According to PwC India’s Sandeep Ladda, this is a good move and will result in “increased commerce and will generate employment in the country.”

“Liberalization of FDI in e-commerce sector will provide much-needed certainty to foreign players and to a sector that has the promise to provide increased commerce and generate employment in the country,” Ladda said. “This will also provide boost to the sector and create healthy competition so as to benefit all the constituents in the ecosystem — consumers, government, e-commerce players, and retailers in general.”

This news will be welcomed by e-commerce players like Amazon, who has been looking at entering the Indian market. According to market analyst IAMAI, the e-commerce industry in India is booming and last year it clocked a 33 percent growth to reach Rs 63,967 crore. This boom has also had a positive effect on employment with a 30 percent growth in hiring expected this year. Flipkart alone is expected to hire 12,000 employees this year.

Flipkart recently raised $210 million and had raised close to $540 million earlier. Snapdeal too raised $100 million in May this year in its second round of funding.

UPDATE: It looks like PWC jumped the gun. According to the transcript of Arun Jaitley’s speech, there is no mention of FDI for e-commerce players. “FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell its products through retail including E-commerce platforms without any additional approval.”

Medianama points out what it means is that manufacturers can sell their products on e-commerce platforms that act like marketplaces, which they could earlier as well.