“Why shouldn’t we allow Flipkart, Snapdeal and others to grow as big as Alibaba?” says Secretary, DIPP

The never-ending debate about FDI or no FDI in ecommerce is on the top of everyone’s minds today. That it is hampering the growth of ecommerce is no secret, but the extent to which it is doing so is again debatable, as some feel the FDI regulations in place now are fine for the growth of business in general.

We heard about the chances of Amazon withdrawing operations from India, although not entirely due to FDI regulations. But hazy FDI rules did come up as a reason. But then, this ‘rumour’ or possible pressurizing tactic has been put to rest now with reports claiming that Amazon has no such intention.

But how many more such rumours or tactics are we to see in the horizon? Is the government going to pay any heed to these? Who is ultimately going to have their way? We have not yet forgotten how Flipkart claimed to not be happy with the possibility of government allowing FDI in ecommerce, and no one needs to spell out the reason for that.

With all these speculations and reports floating around, what does Amitabh Kant, secretary in DIPP (Department of Industrial Policy and Promotion) have to say about the government’s stand on FDI and the ecommerce biggies in general? (Below are the excerpts from Amitabh Kant’s interview in a leading publication.)

On e-commerce, one discussion paper was launched. What is the status now?

In India, we permit 100% FDI in business-to-business and that is why today e-commerce is flourishing in India. That is why a lot of FDI has come in and you just had a very exciting investment by SoftBank into Snapdeal. (It) demonstrates that…a policy framework has clarity and the model on which many countries have grown and we will continue to grow. But if there are some minor issues which require clarification, we will be very happy to interact with the industry and see what best we can do.

But on the front-end e-commerce, the government is not thinking of allowing FDI?

At this moment, we are still examining whether (FDI in) business-to-consumer is required at all, because business-to-business e-commerce is thriving in India already. Young Indian entrepreneurs, very dynamic young Indians, have done extremely well. I think that is the model on which young Indians have taken on the rest of the world. I think we need to see if at all we need any modification in it.

But many critics say the current policy allows FDI in retail e-commerce through the backdoor.

But this is the model on which China grew. Alibaba’s entire model is exactly the same. If Alibaba could grow in China, why shouldn’t we allow Flipkart, Snapdeal and others to grow as big as Alibaba in India?

But what about Amazon? They have announced $2 billion investments in India.

Absolutely, let them compete in the Indian market in the existing model.

But you don’t have any problem with the existing models followed by the e-commerce companies?

If there is any specific issue relating to that—there is none to our mind—let the concerned authority, the Department of Consumer Affairs, look into that.

There were a lot of complaints against Flipkart for not living up to the promise made…

See, it is a marketplace where people buy and sell. It is like going to a brick-and-mortar store. Sometimes you don’t get a product. Sometimes a product is sold out. This is exactly what happens in an e-commerce market as well.

So, no investigation is being carried out by DIPP?

There is no investigation going on. DIPP is not an investigating agency. We are a developmental ministry. If there is any need for investigation, let the concerned authorities look into it.