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MyCFO India http://mycfo.in
FDI In E-commerce – Pros And Cons By Deepak
Narayanan
There has been huge expectations from all sides since the new
Government has been sworn in. In a bid to reignite the economic
engine and make it chug along at a faster pace, the Government
is trying to bring in legislations that it thinks will positively impact
foreign investor confidence. The recent buzz/speculation around
FDI in e-commerce industry is one of the most discussed topics.
MyCFO India http://mycfo.in
Initial Reactions
While the brick and mortar traders have been and will continue
to oppose the move, since they believe that it is likely to
cannibalise their business, what has come as a surprise is the
opposition this proposed change in policy is facing from the
Indian giants in the e-commerce business.
Their contention? That the rules of the game have been changed
and the players are caught unawares. The foreign players in the
Indian e-commerce landscape were earlier only allowed to
function as a marketplace for other products; which meant that
the Indian players have also fashioned their business along the
same lines. Now, with the rules changing the foreign players like
Amazon, Ebay and the likes will be allowed to sell their in house
labels, requiring domestic e-commerce companies to adapt to
this changed scenario.
This apart, in general, this seems to be a welcome move for the
fledgling industry which is looking to the foreign investors to put
in the large amounts of funds that the backend of such businesses
require. Opening up of the e-commerce sector will allow many
small and mid sized businesses to raise the capital required for
investments in technology and supply chain management.
MyCFO India http://mycfo.in
What’s in it for the IT sector
This decision will also impact the IT and ITES positively since the
basis of e-commerce is a technology platform that is robust and
allows the consumer an easy and rewarding experience. Other
than that, technology will be required in also bringing in
operational efficiencies in the entire supply chain; whether it be
the effective management of the back end delivery logistics on
in ensuring greater reach to a marketplace, riddled with low
internet penetration, through mobile applications or ensuring
greater flexibility in online payment options for the credit card
shy population, IT sector will play a key role in the success of any
e commerce venture.
Verdict
The opening up of the e commerce sector to FDI will be
advantageous in the long run to the e-commerce sector as a
whole. Sure, there will be threats from foreign players with
deeper pockets flexing their muscle but the overseas funds
particularly Private Equity and FDI in general will be equally
helpful in standing up to the Indian e-retailers. Lastly, one cannot
deny that the biggest beneficiary is going to be the Indian
consumer who will definitely be spoilt for choices.
MyCFO India http://mycfo.in
“A cloud of dust on the horizon doesn’t always signal the arrival
of enemy troops”
Read the full article here: http://mycfo.in/blog/?p=306
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