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Electronic brands such as Dell, Samsung and Cannon have found a way to beat the Foreign Direct Investment rules governing e-commerce to sell their products online.
These companies are selling their wares through Web sites created specially for them by Indian distributors.
Canon, for instance, has partnered Mumbai-based Net Distribution Services Pvt Ltd to sell cameras and printers on an exclusive Web site called imagestore. Nokia and Lenovo also have similar arrangements with indiatimes.com and thedostore.com. Though this arrangement is legal, it raises the question as to why existing FDI norms prevent brands from sell directly online through their own company Web sites.
Selling thru partners
Alok Bharadwaj, Executive Vice-President, Canon India, told Business Line . “We cannot sell our products online directly, but we can sell through exclusive partners or franchises. Flouting of the FDI norm will happen only when billing of the products are done directly by us.”
According to the Department of Industrial Policy and Promotion, “e-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform.”
It says such companies would engage only in business-to-business e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.
The rule, however, does not stop the companies from selling their products. World’s largest ecommerce site Amazon recently entered India but did not launch its products on the Indian Web site. But now Amazon.in is selling its e-book reader Kindle Fire through a third party company. The company will be selling two variants of Kindle Fire HD (8.9-inch and 7-inch) on the Web site of its authorised distributor Redington in India.
Make them convenient
Cannon’s Bharadwaj said the company also makes sure that the online the prices of the products are also similar to what its offline stores are selling. It is just to make convenient to some of the buyers who cannot go to the offline stores to purchase the products.
Subho Ray, President - Internet & Mobile Association of India, said that it will be illegal only when the companies are delivering their products from the same inventory as of their offline stores.
ronendrasingh.s@thehindu.co.in
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