E-com FDI policy: In letter or spirit?

As 2018 drew to a close, the year-end vacations had begun as also customary celebrations, but a last-mile twist was in store (no pun intended). Against the backdrop of litigation, enquiries by the Enforcement Directorate and impending general elections, the government issued Press Note 2 (December 26, 2018) to provide more clarity on the foreign investment policy in e-commerce. While the Press Note provided more clarity, it also shook up the status quo in a number of ways. After the customary furore, the government issued a clarification in January to reiterate that the Press Note was necessary given the instances of policy violation and circumvention—clearly, the concerns were grave. For the market, the Press Note introduced new variables in a number of ongoing deals and called for significant restructuring efforts.

While players in the e-commerce sector operate using complex structures, they are all household names thanks to the huge investment in this category and the high number of touchpoints (via customers, merchants, ads, jobs). While some e-commerce companies revisited existing structures, others didn’t need to change a thing.