Centre may allow FDI in e-retail

Mumbai/ New Delhi: India could allow global online retailers such as Amazon.com Inc  to sell their own products as early as next month, removing restrictions that have held back competition in one of the world’s biggest, and most price-sensitive, retail markets.

The decision, which is likely to be announced in or alongside the budget, is one of the first tangible signs of economic reform by the business-friendly government of Prime Minister Narendra Modi, who was sworn in 10 days ago.

The move could allow the government to circumvent political opposition to opening up India’s $500 billion retail sector to global retail giants such as Wal-Mart Stores Inc.

Four people privy to discussions within the government told Reuters that officials believed a more robust online retail sector would spur manufacturing and consumption, helping revive an economy that has grown at below 5 percent for two years, the longest period of sub-par expansion since the late 1980s.

“Most stakeholders support FDI (foreign direct investment),” said a senior government official, referring to e-commerce. “We have pitched for opening it up completely.”
Industry surveys say e-commerce could contribute up to 4 per cent to India’s economy by 2020 from under one percent now.

The official, like others who spoke to Reuters on the move, declined to be named because the matter was confidential. When asked about the decision, a spokesman for India’s commerce and industry ministry declined to comment.