Retailers Association of India (RAI) has appreciated the Delhi Government’s ruling on the petition filed by the All India Footwear Manufacturers & Retailers Association (AIFMRA) as a step in the right direction towards bringing clarity and parity on Foreign Direct Investment (FDI) in retail.
The apex footwear industry body had filed a petition in the Delhi High Court seeking clarity on FDI in e-commerce as it feels that marketplaces are in violation of the existing norms that forbid FDI in retail. In the petition, AIFMRA argued that the sales made by online marketplaces have a full character of a sale to a consumer akin to that in retail. Marketplaces are obviously retailers because the payment is accepted by them, delivery is made by them, returns are taken by them and refunds are also made by them. Hence, FDI in marketplaces too should be looked at severely.
In the hearing on this matter yesterday, after noting the FDI policy, considering the taxation angle and the arguments, the Court observed that there has been “a prima facie violation”. Furthermore, it ordered the Government of India to file a reply in two weeks.
Welcoming this directive, Kumar Rajagopalan, CEO, Retailers Association of India, said, “RAI has consistently represented to the government that e-commerce marketplaces are utilising FDI funds, dealing with customers and behaving exactly like retailers—they have been pricing products and have also been advertising themselves as online retail companies. We have sought the Government’s help in clarifying the situation as FDI rules cannot be applied differently to the so-called e-commerce marketplaces while retailers are not allowed to get FDI.”