Civil Services Prep

Prelims 2022 · Economy · Question 6

With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct? 1. They can sell their own goods in addition to offering their platforms as marketplaces. 2. The degree to which they can own big sellers on their platforms is limited. Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

2 only

1. Incorrect. Under India’s FDI policy, foreign-owned e-commerce firms in the marketplace model cannot undertake inventory-based retail by selling their own goods directly.
2. Correct. The rules restrict control over sellers; inventory of a vendor is deemed controlled by the marketplace entity if more than 25% of purchases are from the marketplace group, effectively limiting ownership/control over big sellers.
Therefore, only statement 2 is correct.

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