We would like share with you a favourable update. The Honorable Delhi Government has passed a ruling today on the petition filed by the All India Footwear Manufacturers & Retailers Association (AIFMRA), which is a step in the right direction towards bringing clarity and parity on Foreign Direct Investment (FDI) in retail.
AIFMRA, the apex footwear industry body, had filed a petition in the Delhi High Court seeking clarity on FDI in e-commerce as it feels that marketplaces are in violation of the existing norms that forbid FDI in retail. In the petition, AIFMRA argued that the sales made by online marketplaces have a full character of a sale to a consumer akin to that in retail. Marketplaces are obviously retailers because the payment is accepted by them, delivery is made by them, returns are taken by them and refund are also made by them. Hence, FDI in marketplaces too should be looked at severely.
The hearing on this matter took place on today, wherein the court after noting the FDI policy, considering the taxation angle and hearing the arguments observed that there has been "a prima facie violation". Furthermore, it ordered the Government of India to file a reply in two weeks.
Welcoming this directive, Kumar Rajagopalan, CEO, Retailers Association of India, the apex body of retailers in the country said, "RAI has consistently represented to the government that e-commerce marketplaces are utilising FDI funds, dealing with customers and behaving exactly like consumers. We have sought the Government's help in clarifying the situation as FDI rules cannot be applied differently to the so-called e-commerce marketplaces while retailers are not allowed to get FDI. The e-commerce marketplaces have been behaving like retailers-they have been pricing products and have also been advertising themselves as online retail companies. We, at RAI, have been requesting the government to frame a policy that would create a level-playing field for retailers across all channels. And this directive might help setting the ball rolling in that direction."