FDI for Make in India

Make in India initiative was launched along with action plans prepared for various sectors with the objective of facilitating investment, fostering innovation, building best in class manufacturing infrastructure, making it easy to do business and enhancing skill development. The initiative is further aimed at creating a conducive environment for investment, modern and efficient infrastructure, opening up new sectors for foreign investment and forging a partnership between government and industry through positive mindset.

Make in India initiative has been reviewed and is now focusing on 27 sectors under Make in India 2.0. List of 27 sectors under Make in India 2.0 is annexed as annexure-I. Department for Promotion of Industry and Internal Trade is coordinating action plans for 15 manufacturing sectors while Department of Commerce is coordinating 12 service sectors.

The Government of India is making continuous efforts under Investment Facilitation including financial assistance to Invest India and for implementation of Make in India action plans to identify potential investors. Support is being provided to Indian Missions abroad and State Governments for organising events, summits, road-shows and other promotional activities to attract investment in the country under the Make in India banner. Investment Outreach activities are being carried out for enhancing International co-operation for promoting FDI and improve Ease of Doing Business in the country.

Further, Government has put in place a liberal and transparent policy for Foreign Direct Investment (FDI), wherein most of the sectors are open for FDI under the automatic route. Further, FDI Policy reforms made after 2014-15 in sectors related to Make in India is annexed as Annexure-II. 

Representations have been received in this Department alleging that some e-commerce platforms are engaged in predatory pricing and are providing excessive discounts. The extant Foreign Direct Investment (FDI) policy on e-commerce sector, inter-alia, specifies that e-commerce marketplaces will not directly or indirectly influence the sale price of goods or services and shall maintain a  level playing field. e-Commerce companies having foreign investment can operate only a marketplace model and there are restrictions on the inventory based model of e-Commerce. In order to clarify the same, Department for Promotion of Industry and Internal Trade (DPIIT), vide Press Note 3 of 2016, issued guidelines for FDI in e-Commerce on 29 March 2016.

However, allegations were made against e-Commerce companies that the marketplaces were violating the norms laid down in Press Note 3 of 2016. With a view to clarify the already existing policy framework, Press Note 2 of 2018 was issued by DPIIT on 26 December 2018 to provide further clarification on FDI Policy in relation to e-Commerce companies. Through the latest Press Note 2 of 2018, Government has reiterated the policy provisions to ensure better implementation of the policy in letter and spirit. Further, Clause (ix) of Press Note 2 of 2018, stipulates that e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm's length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/ marketing, payments, financing, etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory. Further, if any violation is reported necessary action may be taken by the competent authority.

Further, Competition Commission of India in one case (i.e. Case No. 40/2019) filed against Flipkart Internet Pvt. Ltd. And Amazon Seller Services Private Ltd., vide order dated 13.01.2020, passed under section 26 (1) of the Competition Act 2002, has directed the DG to conduct an investigation and submit its investigation report. The said order passed by the Commission was impugned by Amazon Seller Services Pvt. Ltd. Before the Hon’be High Court of Karnataka in W.P. No 3363/2020 and the Hon’ble High Court vide order dated 14.02.2020 has stayed the operation of the order of the Commission