Reserve Bank of India Foreign Exchange Department Central Office Mumbai – 400 001 March 09, 2017 Notification No. FEMA.387/2017-RB Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2017 In
exercise of the powers conferred by clause (b) of sub-section (3) of
Section 6 and Section 47 of the Foreign Exchange Management Act, 1999
(42 of 1999), the Reserve Bank of India hereby makes the following
amendments in the Foreign Exchange Management (Transfer or issue of
Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA. 20/2000-RB dated 3rd May 2000) namely:- 1. Short Title & Commencement (i)
These Regulations may be called the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident outside India)
(Fourth Amendment) Regulations, 2017. (ii) They shall come into force from the date of their publication in the Official Gazette. 2. Amendment of the Regulations In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000), in Regulations 2, i.
after the sub-regulation (ii dd) and before the existing sub-regulation
(ii e), the following sub-regulations shall be inserted: “(ii E) E-commerce: -
‘E-commerce’ means buying and selling of goods and services including digital products over digital & electronic network. -
‘E-commerce
entity’ means a company incorporated under the Companies Act, 1956 or
the Companies Act, 2013 or a foreign company covered under section 2
(42) of the Companies Act, 2013 or an office, branch or agency in India
as provided in Section 2 (v) (iii) of FEMA 1999, owned or controlled by a
person resident outside India and conducting the e-commerce business. -
‘Inventory
based model of e-commerce’ means an e-commerce activity where inventory
of goods and services is owned by e-commerce entity and is sold to the
consumers directly. -
‘Market place
model of e-commerce’ means providing of an information technology
platform by an e-commerce entity on a digital & electronic network
to act as a facilitator between buyer and seller.” 3. Amendment of Schedule 1 In the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA 20/2000-RB dated 3rd May 2000), in Schedule 1, in the existing Annex B, the existing entry 16.2 shall be substituted by the following: 16.2 | E-Commerce | % of equity/FDI Cap | Entry route | 16.2.1 | B2B E-commerce activities | 100 % | Automatic | | Such
companies would engage only in Business to Business (B2B) 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. | 16.2.2 | Market place model of e-commerce | 100 % | Automatic | 16.2.3 | Other Conditions | | -
Digital
& electronic network will include network of computers, television
channels and any other internet application used in automated manner
such as web pages, extranets, mobiles etc. -
Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis. -
E-commerce
marketplace may provide support services to sellers in respect of
warehousing, logistics, order fulfilment, call centre, payment
collection and other services. -
E-commerce
entity providing a marketplace will not exercise ownership over the
inventory i.e. goods purported to be sold. Such an ownership over the
inventory will render the business into inventory based model. -
An
e-commerce entity will not permit more than 25% of the sales value on
financial year basis affected through its marketplace from one vendor or
their group companies. -
Goods/services
made available for sale electronically on website should clearly
provide name, address and other contact details of the seller. Post
sales, delivery of goods to the customers and customer satisfaction will
be responsibility of the seller. -
Payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India. -
Any warranty /guarantee of goods and services sold will be responsibility of the seller. -
E-commerce
entities providing marketplace will not directly or indirectly
influence the sale price of goods or services and shall maintain level
playing field. -
Guidelines on cash and carry wholesale trading as given in S.No. 16.1.2 (stated above) shall apply to B2B e-commerce activities. Note: FDI is not permitted in inventory based model of e-commerce. | 16.2.4 | Sale
of services through e-commerce shall be under automatic route subject
to the sector specific conditions, applicable laws/regulations, security
and other conditionalities. | (Shekhar Bhatnagar) Chief General Manager-in-Charge |