Policy regulations in E-commerce sector – Critical analysis of FDI guidelines for market place model

Abstract

According to a recent report by Goldman Sachs, the e-commerce market in India is expected to breach the $100 billion mark by the financial year 2020. Factors such as accelerating internet access and penetration of mobile phones and robust investment have driven the growth of this industry, and if current projections are anything to go by, India is on route to becoming the world's fastest growing e-commerce market. Recently Government of India allowed 100 percent FDI in online retail of goods and services under the socalled “marketplace model” through the automatic route, seeking to legitimize existing businesses of e-commerce companies operating in India. With this growth prospects for the Indian e-commerce industry comes the challenge of safeguarding the rights of the consumers. Consumers engaging in purchases through e-commerce platforms are subjected to various clauses, terms and conditions usually known as the fine print, which they are unaware of, or accept them without reading them thoroughly. The paper describes the concept of FDI in general with the pertaining research of the possible merits and demerits of it. The paper outlines the decision of Government to implement 100 percent foreign direct investment in e-commerce sector through marketplace model. Further the paper deals with the legal issues pertaining to the laws and acts framed in this regard and the possible loopholes which can be used to conduct fraudulent activities and also the backlash on governance.