Emergence of New Regulation in Foreign Direct Investment: Indian E-commerce

Over the past three decades, India has increased its participation in global business in order to facilitate its continued economic growth and engagement with the world's economy. India has encouraged Foreign Direct Investment (FDI) in a variety of industries, including manufacturing, infrastructure, information technology, automobile industry, pharmaceuticals, and other business services. India has also introduced FDI policies and regulations to ensure that business transactions are conducted in a fair manner. As India was reinventing information technology in the year 2000, it began accepting foreign direct investment in e-commerce. This industry is anticipated to be one of the rising industries for the economy in the future. Over the last decades, the number of individuals using the internet and the number of investors and companies participating in e-commerce have grown significantly. The current market value of the industry is around $120 billion, and it is predicted to grow to $200 billion by the end of 2025. Policies and procedures had to be followed from the beginning of FDI in the e-commerce industry till today. Improving access for foreign investors to participate in the e-commerce industry by automating the screening process was implemented in 2016 and has allowed them to do so at a greater level inside the marketplace model. Because of this, there have been few unfavorable repercussions seen in the local retailers in India. But recently, The Indian Government has made strict regulations on the FDI e-commerce sector to avoid the exploitation of local retailers by introducing the arm-length price regulation to reduce the huge discounts. The government is in the process of launching an online marketplace called Open Network for Digital Commerce (ONDC) in which consumers and merchants alike will be able to purchase and sell goods and in which merchants will have full control. Because of this change, E-commerce companies who were giving competitive discounts while still maintaining complete control of the online retail sector may find themselves in a position where they must compete with other companies. According to the dissertation, if this new online marketplace called ONDC is implemented by the Indian government there would be long-term advantages for small businesses in India and implications for established market leaders.