Pressure is likely to mount on India for relaxing foreign direct investment norms in the e-commerce sector with Japan initiating a move in this regard by coming out with a proposal at the Regional Comprehensive Economic Partnership (RCEP) forum. Also Read - E-commerce rules draft dos and dont’s: No more flash sales on phones, other goods and more
The RCEP comprises 10 ASEAN members and its six free trade agreement partners — India, China, Japan, Korea, Australia and New Zealand. They are negotiating a mega trade deal. Japan, one of the key members of the RCEP, has floated a paper proposing relaxation in the foreign direct investment (FDI) norms in the e-commerce sector, sources said, adding “In the next meeting which is scheduled in Kyoto (Japan), the paper would be discussed among the members and India would have clarify its position on the move,” they said. Also Read - Facebook will now make money from WhatsApp's in-app purchases
India’s FDI policy restricts e-commerce companies from offering services directly to retail consumers. However, 100 percent FDI is allowed in business-to-business e-commerce. Japanese companies including Uniqlo have sought relaxations in the foreign investment norms in the sector. Japan is an important partner country for India as it has committed huge investments in areas such as Delhi-Mumbai industrial corridor and other infrastructure related projects. Another source said that as Japan is India’s major economic partner, India would face pressure on the matter and soon the Department of Commerce and DIPP would discuss the matter. E-commerce companies from other countries also including the US are demanding relaxation in the sector. Also Read - Flipkart to acquire Rs 1,500 crore worth stake in Aditya Birla Group's Fashion retail
Today, India is one of the fastest-growing e-commerce markets in Asia-Pacific along with China. With increase in Internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops. Furthermore, favoured demographics and growing Internet user base helped in aiding the growth.As per estimates, the sector’s market size in the country is around $5 billion annually. Analysts say online shopping space in India is expanding at a massive scale and the journey is not yet over. The group is negotiating a big trade agreement that aims at reducing or eliminating tariffs, facilitating movement of professionals and providing a level-playing field to each other’s investors. India, with its over 1.2 billion people, offers a huge domestic market. The RCEP negotiations were launched in Phnom Penh in November 2012. The RCEP 16 economies account for over a quarter of the world economy.
The last round of RCEP negotiations was concluded in Bangkok earlier this month. The mega trade deal aims to cover goods and services, investments, economic and technical cooperation, competition and intellectual property.