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What are the new FDI policy changes and their implications

The last few years have seen a significant increase in online shopping in India. Apart from the availability of cheaper products online as compared to offline, there are other factors which make online shopping the preferred choice for buyers.

1. The exclusivity of products online- You may have seen smartphones and other products being exclusively sold at a single online platform, most popularly Flipkart & Amazon. I remember visiting my local mobile store to get Redmi Note 5 Pro, only to know two things- the product would be available after 2 days and with a higher price. I bought it from Flipkart after waiting for a week for Flash Sale.

2. Massive discounts- What lures us to online shopping are the huge discounts that they offer. E-commerce giants offer exclusive products from renowned brands available only at their stores. The products are available at discounted prices and at a much cheaper rate compared to offline stores. Apart from that, e-commerce giants like Flipkart & Amazon have a significant proportion of in-house sellers which enables them to give massive discounts on products.

What are the new FDI policy changes and their implications

1. With the new FDI rules, Indian e-commerce with foreign investments can no longer sell products exclusively. This implies specifically to smartphones where exclusive selling in one online platform is used as a marketing strategy by renowned brands like Honor, Xioami, etc. This will give an opportunity to more vendors, both online and offline, to sell products from renowned brands.

2. E-commerce will not sell products from firms and vendors that they have stakes in. This will provide an equal opportunity to multiple vendors.

3. If the inventory of a vendor in the e-commerce platform shares more than 25% of the products available, the e-commerce marketplace is regarded to have an inventory model. In such a case, FDI is disallowed. So, e-commerce with foreign investments cannot have more than 25% of products in its inventory from a single vendor. This will create space for smaller vendors to participate and compete with other vendors.

Overall, the new FDI policy aims to make the e-commerce marketplace fair and beneficial for small vendors. It aims to ensure that money and aggressive marketing doesn’t rule out growth and benefits to small vendors. Along with that, it ensures that the consumers get to choose rationally and get products fairly with thorough research.

We at WhiteCashback make it easier for you to compare prices from different sites. Visit WhiteCashback and shop at the best prices. Not to forget, the cashback you can avail with your purchases.

About Ayushi Chauhan

Being quite familiar with the online shopping trends & e-commerce industry, I have a vast experience in writing content for- blogs, articles, web pages & reviews for various e-commerce websites.

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