FEMA & FOREIGN INVESTMENT

V.K. Unni
Professor
Indian Institute of Management Calcutta
E-mail: unniv@iimcal.ac.in

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 An Overview of FEMA
• In the year 2000, the once dreaded Foreign Exchange Regulation
Act 1973 (FERA) was repealed and replaced with the Foreign
Exchange Management Act 1999 (FEMA)
• While FERA endeavoured to preserve the foreign exchange
resources, FEMA focuses upon facilitating external trade and
payments and on promoting the orderly maintenance of the foreign
exchange market in India.
FEMA applies to two types of persons mentioned below
1. Person Resident in India
2. Person Resident outside India
(the term person includes an individual, a company, firm, Hindu
Undivided Family (HUF) and any agency, office or branch owned or
controlled by such person)
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 FEMA
Person Resident in India,
• A person who has been residing in India for more than 182 days,
in the last financial year.
• Thus if Mr. X has to be assessed, as to whether he is a person
resident in India, for any transaction that happened in June 2023,
then X should have resided in India for more than 182 days during
1st April 2022 to 31st March 2023
• However this comes with the following exceptions
1. In the case of a person who has gone out of India or who stays
outside India,
I. for taking up employment abroad, or
II. for carrying on a business abroad or
III. for any other purpose, in such circumstances as would indicate
his intention to stay outside India for an uncertain period

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 FEMA
• In such cases he/she will be considered as a non-resident
from the date of leaving, irrespective of the fact that he was
residing in India for more than 182 days in the preceding
financial year
2. In the case of a person who has come to India
i. for taking up employment in India, or
ii. for carrying on in India a business in India, or
iii. for any other purpose, in such circumstances as would
indicate his intention to stay in India for an uncertain period,
• In the abovesaid 3 instances that person will be considered as
a person resident in India from the date of arriving, if that
person had resided in India for more than 182 days in the
preceding financial year

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 FEMA
With respect to corporates, Person Resident in India also includes the
following ,
a) any person or body corporate registered or incorporated in India, or
b) an office, branch or agency in India owned or controlled by a person
resident outside India, or
c) An office, branch or agency outside India owned or controlled by a
person resident in India
• A “Person resident outside India" means a person who is not resident in
India
FEMA applies to two types of transactions mentioned below
1. Capital account transaction
2. Current account transaction
• Capital account transactions are those dealings which alter the assets or
liabilities outside India of persons resident in India or assets or
liabilities in India of persons resident outside India
Examples
❑ transfer or issue of any foreign security/shares by a person resident in
India;
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 FEMA
❑ transfer or issue of any Indian security/shares by a person
resident outside India;
❑ transfer of immovable property outside India, other than a lease
not exceeding five years, by a person resident in India; etc
❑ This covers purchase or transfer of capital assets (like shares/land
etc) in a foreign country by persons residents in India and
purchase or transfer of capital assets (like shares/land etc) in India
by persons resident outside India
❑ Initially Capital Account transactions were regulated by RBI in
consultation with Govt. of India
❑ But from the year 2019 onwards Govt. of India started to
regulate, in consultation with RBI, any classes of capital account
transactions except debt instruments
❑ In the case of debt instruments RBI will continue to regulate them
in consultation with Govt. of India (examples of debt instruments-
Govt. bonds, corporate bonds, borrowings by Indian corporates
through loans etc.)

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 FEMA
• Current account transaction means a transaction other than a capital
account transaction and includes,-
1. payments due in connection with foreign trade, export, import of
goods and services
2. short-term banking and credit facilities in the ordinary course of
business,
3. house rent, payments due as interest on loans,
4. expenses in connection with foreign travel, education and medical
care of parents, spouse and children
• In the case of current account transactions the FEMA adopts a liberal
approach
• It states that any person may undertake a current account transaction
through an authorized person (i.e., Bank, Forex dealer) without any
prior permission
• Current Account transactions are regulated by Govt. of India in
consultation with RBI

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 An Overview of FEMA
Categorization and its consequences
• Provisions of FEMA, have different consequences on Person resident
in and outside India
• As regards a " Person Resident in India", he/she/it can acquire, hold,
own, possess or transfer any foreign exchange, foreign security or any
immovable property situated outside India, only according to FEMA
• Foreign security means any security, in the form of shares, bonds,
debentures or any other instrument denominated or expressed in
foreign currency
• Foreign exchange" means foreign currency and it also includes
deposits, credits and balances payable in any foreign currency, Drafts,
letters of credit or bills of exchange drawn in Indian currency but
payable in any foreign currency

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 An Overview of FEMA
• RBI may prohibit, restrict or regulate the following capital
account transactions conducted by a Person Resident in India
1. Transfer or issue of any foreign security by a person resident in
India
2. Any borrowing or lending in rupees in whatever form or by
whatever name called between a person resident in India and a
person resident outside India
3. Deposits between persons resident in India and person resident
outside India:
4. Giving of a guarantee in respect of any debt, by a person
resident in India and owed to a person resident outside India.
5. Transfer of immovable property outside India, other than a lease
not, exceeding five years, by a person resident inside India.
• However a person resident in India may hold, own transfer or
invest in foreign currency/security or any immovable property
situated outside India if it was acquired, held or owned by such
person when he was resident outside India or inherited from a
person who was resident outside India. (Sec 6(4) FEMA)
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 An Overview of FEMA
Person Resident Outside India
• Just as in the case of a Person Resident in India, FEMA has certain
consequences for a "Person Resident outside India“
• As regards a " Person Resident Outside India", he can acquire, hold,
own, possess or transfer any Indian currency, Indian security or any
immovable property situated inside India only according to FEMA
• However a "person resident outside India" may hold, own, transfer
or invest in Indian security or any immovable property situated in
India if such security or property was acquired, held or owned by
such person when he was "resident in India" or inherited from a
person who was resident in India

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 An Overview of FEMA
• Furthermore the RBI may regulate the
establishment in India of a
branch/office/place of business by a person
resident outside India, for carrying on any
activity relating to such branch/ office

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 Liberalised Remittance Scheme
• This scheme is available to all resident individuals under which they
may freely remit up to US $ 2.5 lakhs per financial year or its
equivalent for any permissible current or capital account transaction or
a combination of both, outside India
• Initially when it was introduced in 2004 the amount was $ 25000/per
financial year, progressively it was increased to US $2 lakhs (from
2007) or its equivalent, currently it stands at US $2.5 lakhs or its
equivalent
• This facility is not available to Corporates, Partnership firms, HUF,
Trusts etc
• Under this resident individuals can acquire and hold shares or debt
instruments or any other assets outside India, without prior approval
RBI.
• They can also acquire immovable property outside India

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 Liberalised Remittance Scheme
• Resident individuals can also open, maintain and hold foreign
currency accounts with banks outside India, set up joint ventures or
fully owned subsidiaries outside India within this US $2.5 lakhs
However remittance facility under the Scheme is not available for any
purpose specifically prohibited
• like purchase of lottery etc
• remittances made to Bhutan, Nepal, Mauritius or Pakistan
• Remittances made to non co-operative countries and territories,
identified by the Financial Action Task Force, the countries are Cook
Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria,
Philippines and Ukraine
• Remittances made to those individuals and entities identified as
posing significant risk of committing acts of terrorism
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 FEMA
• In fact, the erstwhile Notifications like FEMA 20 and FEMA 120 etc
are the sum and substance of the various mechanisms devised by
RBI to give effect to provisions of FEMA (Particularly Sec. 6(3))
• By allowing the RBI to regulate the "transfer or issue of any security
by a person resident outside India”, FEMA granted authority to RBI
to set guidelines to determine if and when persons resident outside
India may purchase shares/securities of an Indian company.
• Thus FEMA 20 was an important notification that dealt with foreign
investment in India and FEMA 120 dealt with overseas investment
made by persons resident in India (e.g. TATA’s acquisition of
CORUS)
• However as mentioned earlier since the year 2019 the power of RBI
to regulate non debt instruments has been transferred to Govt. of
India
• Thus FEMA 20 has been superseded by Foreign Exchange
Management (Non-Debt Instruments) Rules, 2019

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 FEMA
• For the purpose of the FEMA, foreign investment in India by a non-
resident has been generally divided into various categories and the
most important Six categories are
1. Investment under the Foreign Direct Investment Scheme (FDI
Scheme)
2. Investment by Foreign Portfolio Investors (FPI) under the Portfolio
Investment Scheme (PIS)
3. Investments by NRIs (Non-Resident Indians) under the Portfolio
Investment Scheme (PIS)
4. Investment by NRIs on Non- repatriable basis
5. Investments made by Foreign Venture Capital Investors
6. Investments by FPIs/NRIs in instruments other than
shares/convertible debentures

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 FEMA
• Non-Resident Indian (NRI) means a person resident outside India who is
a citizen of India or is a Person of Indian Origin (PIO)
PIO means a citizen of any country other than Bangladesh or Pakistan or Sri
Lanka, if
a) he/she at any time held Indian passport; or
b) he/she or either of his/her parents/grand parents was a citizen of India
or
c) he/she is a spouse of an Indian citizen
• Amongst the earlier mentioned 6 categories, FDI Scheme is the most
important regulation involving foreign investment
• Govt. of India’s Consolidated FDI Policy 2020 on Foreign
Investment in India, contains all the sector specific regulations on
foreign investment in India , most recent one is issued in October 2020
Details at https://dpiit.gov.in/sites/default/files/FDI-PolicyCircular-2020-
29October2020.pdf

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 FEMA
1) FDI Scheme - Eligibility for Investing in India
• A non-resident entity can invest in India, except in those
sectors/activities which are prohibited
• However, an entity of a country, which shares land border with
India or where the beneficial owner of an investment into India is
situated in or is a citizen of any such country, can invest only under
the Government/ Approval Route
• A citizen of Pakistan or an entity incorporated in Pakistan can
invest, only under the Government route, in sectors/activities other
than defence, space, atomic energy and sectors/activities prohibited
for foreign investment.
Nature of Investments
• Indian companies have general permission to issue equity shares /
fully and mandatorily convertible debentures /fully and
mandatorily convertible preference shares subject to certain
conditions on pricing and valuation
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 FEMA
• Under the Foreign Direct Investments (FDI) Scheme,
investments can be made in shares/fully convertible
debentures of an Indian company by non-residents through
two routes:
• Automatic Route: Under the Automatic Route, the foreign
investor or the Indian company does not require any
approval from the Reserve Bank or Government of India for
the investment.
• Government Route: Under the Government Route, the
foreign investor or the Indian company should obtain prior
approval of the Government of India for the investment.
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 FEMA
• FIPB was an inter-ministerial body within the Department of
Economic Affairs (Ministry of Finance) responsible for processing
FDI proposals and make recommendations to the finance minister.
• If the investment amount exceeded Rs. 5000 crores FIPB would
make its recommendations to the Cabinet Committee on Economic
Affairs (CCEA).
• In the year 2017 the FIPB has been abolished by the Govt. of India
• Henceforth individual departments of Govt. of India have been
empowered to clear FDI proposals in consultation with Department
for Promotion of Industry and Internal Trade (DPIIT) -Ministry of
Commerce, which will also issue the standard operating procedures
for processing applications.

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 FEMA
Investment by a person resident outside India is prohibited under FDI in the
following sectors:
1. Business of chit fund
2. Nidhi company
3. Agricultural or plantation activities
4. Trading in Transferable Development Rights (TDRs) (TDRs are
certificates issued in respect of land acquired for public purposes by the
Government as a consideration of surrender of land by the owner without
monetary compensation)
5. Lottery (online and traditional), casinos, gambling
6. Real estate business Construction of Farmhouses
Real estate business means dealing in land and immovable property with a
view to earning profit or earning income there from and does not include
a) development of townships,
b) construction of residential / commercial premises, educational
institutions, city infrastructure
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 FEMA
c) Real Estate Investment Trusts (REITs)
d) Furthermore earning any rent or income from the lease of property, not
amounting to transfer, will not be categorized as ‘real estate business’
• Limited Liability Partnership (LLP) formed and registered under the
Limited Liability Partnership Act, 2008 shall be eligible to accept FDI
• FDI is permitted under the automatic route in LLPs operating in sectors /
activities where 100% FDI is allowed through the automatic route and
there are no FDI linked performance conditions,(sectors where 100%
FDI under automatic route is allowed for companies are mining, courier
services, greenfield airports, NBFCs in merchant banking, stock broking
etc)
• However citizens of Pakistan and Bangladesh or entities set up in these
two countries are not allowed to invest in LLP
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 FEMA
• In the year 2020, US based PE fund Silver Lake invested about Rs.
9300 crores in Reliance Retail Ventures Ltd.- RRVL (an unlisted
subsidiary of Reliance Industries Ltd.) for a 2.1% stake
• Similarly General Atlantic another US based PE fund had invested Rs.
3675 crores for a 0.84% stake in RRVL and KKR another US based
PE fund also invested about Rs 5500 crores in RRVL for a 1.28% stake
• All the three investments were done through preferential allotments
and are categorised as FDI since it is a direct investment in the
company
• if the investment by an FPI like a foreign PE fund is less than 10% in
an Indian listed company , it is considered as portfolio investment and
not as FDI
• In the case of an unlisted company any investment by a non-resident is
treated as FDI, while in the case of listed companies it will be treated
as FDI only if the shareholding of the non resident is 10% or more
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 Investments by FPIs under Portfolio Investment Scheme (PIS)
2) Investments by Foreign Portfolio Investors (FPIs) under PIS
Evolution of Foreign Portfolio Investments in India
• While Foreign Institutional Investors (FIIs) and their sub accounts
were there from the year 1995, the category of QFIs (Qualified
Foreign Investors ) have been created in 2011-12
• Sub-accounts are defined as any person resident outside India on
whose behalf investments are made by FIIs in India and who is
registered as subaccount under these regulations
• In the year 2014 SEBI streamlined the various available routes for
FPIs through a regulation called SEBI - FPI Regulations 2014
• This class of FPI is created by merging the existing classes of
investors namely, the FIIs, their sub-accounts and QFIs
• FPI Regulations 2014 has been superseded by FPI Regulations 2019
which is the current law regulating FPIs in India

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 Investments by FPIs under PIS
The principal eligibility criteria for an FPI include the following:
(a) FPI shall not be a resident Indian
(b) FPI shall not be a Non-Resident Indian or an Overseas Citizen of
India
(c) FPI shall be a resident of the country whose securities market
regulator is a signatory to the International Organization of
Securities Commissions (IOSCO) or a signatory to the bilateral
Memorandum of Understanding with SEBI
FPIs are classified into 2 categories
Category I FPI
a) Foreign Government and Foreign Government related investors
such as central banks, Governmental agencies, sovereign wealth
funds

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 Investments by FPIs under PIS
b. international or multilateral organizations or Agencies including
entities controlled or at least 75% directly or indirectly owned by
such Government and Government related investor
c. appropriately regulated funds such as mutual funds, investment
trusts, insurance / reinsurance companies, banks, asset management
companies, university funds, venture capital funds, pension funds,
portfolio managers, investment managers/advisers etc
Category II FPI
a) all other regulated funds not eligible under Category I
b) endowments and foundations, charitable societies
c) corporate bodies, trusts, individuals and family offices
d) unregulated funds in the form of LLPs, trusts etc
FPIs under both the categories have to be registered with SEBI and
should be granted a certificate for the same by the Designated Depository
Participant (DDP) Unni IIM Calcutta 25
 FPIs
• DDPs are very important intermediaries who connect investors
with Depositories (banks often act as DDPs)
• An FPI can invest in securities in India only after complying
with FPI Regulations 2019
• An FPI shall invest only in the following securities,
(a) shares, debentures and warrants issued by a body corporate;
listed or to be listed on a recognized stock exchange in India;
(b) units of schemes launched by mutual funds
(c) derivatives traded on a recognized stock exchange;
(e) units of real estate investment trusts, infrastructure investment
trusts etc
(f) Indian Depository Receipts;
(g) any debt securities or other instruments as permitted by RBI

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 Portfolio Investment Schemes (PIS)
• As the name suggests foreign portfolio investment involves buying of
securities, traded in another country, which are highly liquid in nature
and, thus allow investors to make quick money through their frequent
buying and selling
• Registered FPIs are eligible to purchase shares issued by listed Indian
companies under the Portfolio Investment Scheme (PIS)
• An Individual FPI can invest up to a maximum of 10% of the total
paid up capital of the Indian company
• Total holdings of all FPIs put together shall not exceed 24 % of the
paid-up capital
• The above said aggregate limit of 24 % for all FPIs can be increased
to the sectoral cap as applicable to the Indian company concerned, if
its Director Board passes a resolution which is followed by a special
resolution of the company
• If FPI breaches the limit, the excess shares bought shall be divested
within 5 trading days or else FPI will be considered FDI.

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 PIS
• In April 2020 the FPI limits for all listed stocks on Indian stock
exchanges have been revised
• With this, FPI limit in some stocks has gone up to 100 percent,
while in some stocks FPI limits have been increased to their
respective sectoral caps
• The Finance Ministry had published a circular to raise FPI
limits for all Indian companies to sectoral FDI limits after
March 31, 2020, unless companies’ boards and shareholders
passed resolutions to the contrary.
• However, the total FPI limit with respect to an Indian company
in a sector where FDI is prohibited shall be 24 per cent.

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 Foreign investments by NRIs under PIS

3) Investments by NRIs under PIS

• NRIs are allowed to invest in shares of listed Indian companies in
recognised Stock Exchanges under the PIS.
• NRIs can invest through designated Authorised Dealers (AD), on
repatriation basis under PIS route up to 5 % of the paid- up of listed
Indian companies.
• The aggregate paid-up value of purchased by all NRIs cannot exceed
10 % of the paid-up capital of the company
• This limit of 10 % can be increased to 24 % if its Director Board
passes a resolution which is followed by a special resolution of the
company

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 Foreign investments by NRIs on Non-repatriation Basis
4 ) Purchase of shares or convertible debentures by NRI on Non
repatriation basis
a) An NRI may purchase shares or convertible debentures of an Indian
company on non-repatriation basis without any limit
b) Invest in the capital of a Limited Liability Partnership-LLP without
any limit
c) Invest in funding instruments like Convertible Notes* issued by a
startup company
d) Purchase or sell units of domestic equity mutual funds
e) Invest in proprietary or partnership firms not engaged in any
agricultural/print media or real estate business.
• However NRIs cannot invest under this route in a Nidhi company or a
company engaged in agricultural/plantation activities/real estate
business etc
• The amount invested in shares and the capital appreciation thereon
shall not be allowed to be repatriated abroad
• In the case of investment on non-repatriation basis, the sale proceeds
shall be credited to only to NRO (Non Resident Ordinary Rupee)
account
• Law treats NRI investments on non-repatriation basis as domestic
investment.
(*Convertible Notes are hybrid instruments, which have a maximum
tenure of 10 years, used exclusively by start ups for raising funds)
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 Investments by Foreign VC Funds
5) Investments made by Foreign Venture Capital Investors
A Foreign Venture Capital Investor (FVCI) registered with SEBI can
a) purchase securities, issued by an unlisted Indian company engaged
in certain sectors like biotechnology, nanotechnology, hotels and
convention centres, production of biofuels etc
b) purchase units of a Venture Capital Fund (VCF)
c) Purchase equity/equity linked instrument/debt instrument issued by
an Indian start-up irrespective of the sector in which the start-up is
engaged
d) invest in securities through a recognised stock exchange
• At the time of granting approval, RBI permits the FVCI to open a
foreign currency account or rupee account.
• In the case of unlisted shares, the purchase / sale of shares,
debentures and units can be at a price that is mutually acceptable to
the buyer and the seller
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Investment Instruments other than Shares or Convertible
Debentures

6) Investment in Instruments other than Shares and Convertible

Debentures
• FPIs can buy on repatriation basis dated Government securities (G-
Secs),listed non-convertible debentures / bonds, issued by Indian
companies and units of domestic mutual funds
• NRIs can also, without any limit, purchase on repatriation or non-
repatriation basis Government Securities, Treasury Bills, units of
domestic mutual funds etc
• A NRI may subscribe to the National Pension System-NPS
governed and administered by Pension Fund Regulatory and
Development Authority (PFRDA)

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 Provisions Relating to Issue/ Transfer of Shares under FDI
Scheme
• The capital instruments should be issued within 60 days from the date
of receipt of the inward remittance received through normal banking
channels
• If the capital instruments are not issued within 60 days from the date
of receipt of the inward remittance the amount of consideration so
received should be refunded to the non-resident investor within 15
days from the date of completion of sixty days
• Issue price of shares Price of shares issued to persons resident outside
India under the FDI Policy, shall not be less than –
a) the price worked out in accordance with the SEBI guidelines, if the
shares of the company are listed on any recognized stock exchange in
India (i.e. pricing applicable in the case of preferential allotment by a
listed company)

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 Provisions Relating to Issue/ Transfer of Shares under FDI
Scheme
b) If shares of the company are not listed in a stock exchange the fair
valuation of shares done by a SEBI registered Merchant
Banker/Chartered Accountant as per any internationally accepted
pricing methodology (like Discounted Cash Flow method) on arm’s
length basis
c) The guiding principle would be that the person resident outside India
is not guaranteed any assured exit price at the time of making such
investment/ agreement and shall exit at the price prevailing at the
time of exit.
• Non-resident investors can also invest in Indian companies by
purchasing/acquiring existing shares from Indian shareholders or from
other non-resident shareholders.
• General permission has been granted to non-residents/NRIs for
acquisition of shares by way of transfer except in certain cases where
prior approval of RBI is needed
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 Provisions Relating to Issue/ Transfer of Shares under FDI
Scheme
Prior permission of RBI in certain cases for transfer of capital
instruments
1. Transfer of capital instruments from resident to non-residents
by way of sale where:
(a) Transfer is at a price which falls outside the pricing guidelines
prescribed under FEMA Rules
(b) Transfer of capital instruments involving deferment of payment
of consideration.
2. Transfer of any capital instrument, by way of gift by an NRI or
a person resident in India to a person resident outside India,
here RBI will consider the following before giving approval
a) The proposed transferee (donee) is eligible to hold such capital
instruments under the relevant rules
b) The gift does not exceed 5 per cent of the paid-up capital of the
Indian company
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 FEMA & Foreign Investment
c) The applicable sectoral cap limit in the Indian
company is not breached.
d) The transferor (donor) and the proposed
transferee (donee) are close relatives as defined
under the Companies Act 2013
e) The value of capital instruments to be
transferred as gift does not exceed the rupee
equivalent of US $ 50,000 during the financial
year

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 FDI in E-Commerce
• Different sectors have different rules on FDI which have been
customized to suit the interests of that particular sector
• Thus Rules framed for regulating FDI in E-Commerce might be
different from those dealing with FDI in banking sector
FDI in E-Commerce (Press Note 2 of 2018 of DPIIT is the relevant
regulation regarding FDI in E-Commerce)
• For E–commerce Indian regulation allows up to 100% stake under the
automatic route
Important Conditions
• The Regulation defines E-commerce as buying and selling of goods and
services including digital products over digital & electronic network
• E-commerce entities would engage only in Business to Business (B2B)
e-commerce and not in Business to Consumer (B2C) e-commerce
• E-commerce entity means a company incorporated under the Companies
Act or a foreign company or an office, branch or agency in India owned
or controlled by a person resident outside India and conducting the
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e-commerce business
 FDI in E-Commerce
Inventory based model of E-Commerce-
• This model means an e-commerce activity where inventory of goods
and services is owned by e-commerce entity and is sold to the
consumers directly
Marketplace based model of E-Commerce
• This model means an information technology platform by an
e-commerce entity on a digital & electronic network to act as a
facilitator between buyer and seller (like Amazon and Flipkart)
• i) 100% FDI under automatic route is permitted in marketplace
model of e-commerce.
• ii) FDI is not permitted in inventory-based model of e-commerce.

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 FDI in E-Commerce
• Marketplace e-commerce entity will be permitted to enter into
transactions with sellers registered on its platform on B2B basis.
• E-commerce marketplace may provide support services to sellers in
respect of warehousing, logistics, order fulfillment, call centre,
payment collection and other services
• E-commerce entity like Amazon/Flipkart providing a marketplace will
not exercise ownership or control over the inventory i.e. goods
purported to be sold.
• Such an ownership or control over the inventory will render the
business into inventory-based model
• Inventory of a vendor will be deemed to be controlled by e-commerce
marketplace entity if more than 25% of purchases of such vendor are
from the marketplace entity or its group companies.
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 FDI in E-Commerce
• An entity having equity participation by e-commerce marketplace
entity or its group companies will not be permitted to sell its products
on the platform run by such marketplace entity
• In February 2019, Amazon India sold 25 percent of its shares in
Cloudtail (biggest vendor on Amazon Platform) to Prione Business
Services, which now owns 76 percent of Cloudtail, up from 51
percent to comply with the Rules (The remaining 24 percent is owned
by Amazon Asia-Pacific Resources, a non-Indian entity of Amazon)
• In marketplace model, any warrantee/ guarantee of goods and services
sold will be responsibility of the seller.
• E-commerce entities providing marketplace will not directly or
indirectly influence the sale price of goods or services and shall
maintain level playing field

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 FDI in E-Commerce
• E-commerce marketplace entity will not mandate any seller to sell any
product exclusively on its platform only
• Cash back provided by group companies of marketplace entity to
buyers shall be fair and nondiscriminatory.
• 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.
• In marketplace model goods/services made available for sale
electronically on website should clearly provide name, address and
other contact details of the seller.
• Post sales, delivery of goods to the customers and customer
satisfaction will be responsibility of the seller.

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 Thank You Very Much

V.K. Unni
Professor
Indian Institute of Management Calcutta
E-mail: unniv@iimcal.ac.in

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