FDI In Retail And E-Commerce— Procedures, Fees And Documents Required

100% FDI is allowed for single branded retail industry under retail and e-commerce industry through automatic route .

However, for multi brand retail trading FDI is allowed up to 51% through automatic route and beyond that it required government route.

Many documents are required for FDI in the retail and e-commerce which are as follows

• List of names, addresses, and identification proof of all foreign collaborators of the investor company/entity
• From both investor/investee entities- Certification of Incorporation and MoA
• Copy of joint venture agreement/ shareholders agreement/technology
• Copy of downstream intimation
• Copy of relevant past FIPB/SIA/RBI joint with the current proposal
• Copy of Downstream Intimation
• An affidavit to ensure all documents are relevant
• Valuation certification approved by a certified chartered accountant
• CS Certificate
• Declaration by the Authorized Representative of the Indian Company/LLP
• Pre and post-shareholding pattern in the Indian company
• Copy of the order of the High Court on the scheme of merger/ demerger/ amalgamation (if applicable)
• RBI approval on the amount of refund concerning the amount of the issue (if applicable)
• Valuation certificate
• Approval letter (if non-compliant with the guidelines – if applicable)
• Relevant RBI approvals for an issue of equity shares against funds payable to the foreign investor
• FIRC/ Debit statement
• Know Your Customer (KYC)

There are conditions tapping for the procedure of FDI approval which must be understood by investors.

Following are the key advantages for investors who invests in retail and e-commerce sector under FDI::

1. Robust Demand - Nearly 60 shopping complexes, totaling 23.25 million square feet of retail space, are projected to open between 2023 and 2025. Increased purchasing power has resulted in rising demand. One of the world's most exciting and developing markets is India. Multinational companies are eager to be the first to join the market and capitalize on India's large consumer base.
2. Policy Support - In order to enhance the business environment and facilitate the registration of fully owned subsidiaries in India for international corporations, the Indian government has instituted certain policies, rules, and laws. Moreover, it is anticipated that FDI liberalization will improve Made in India and the Ease of Doing Business.
3. Innovation In Financing - Many global investors are investing in the retail industry, either by purchasing existing assets or by launching greenfield development projects. Consumers may now buy durable products with easy credit thanks to the collaborative efforts of financial institutions, banks, and retailers.
4. Increasing Investments - FDIs of US$ 4.56 billion were invested in India's retail trading industry between April 2000 and September 2023. In India, the retail industry employs more than 35 million people and contributes more than 10% of the GDP of the nation. By 2030, it is anticipated to generate 25 million new employment.

1. Growth in investment for both countries - FDI provides much-needed funding for the retail and e-commerce industries' growth and development. This can stimulate general economic growth by resulting in the construction of additional retail locations, warehouses, and logistical facilities.
2. Easy access to global market - In many emerging nations, the retail and e-commerce industries are growing dramatically. Through FDI, international businesses can enter these lucrative areas and take advantage of the rising demand from consumers.
3. Develop work efficiency - Foreign organizations frequently use cutting-edge technologies and management approaches in areas such as supply chain management, inventory control, and internet marketing. Greater efficiency in the domestic retail and e-commerce sector results from the facilitation of knowledge and expertise transfer through foreign direct investment (FDI).
4. Introduce consumers to range of products and services - Foreign organizations frequently use cutting-edge technologies and management approaches in areas such as supply chain management, inventory control, and internet marketing. Greater efficiency in the domestic retail and e-commerce sector results from the facilitation of knowledge and expertise transfer through foreign direct investment (FDI).

While it provides funding for growth, promotes competition, and facilitates technology transfer, FDI in retail and E- commerce industry may also endanger local enterprises and create data privacy concerns. FDI must be carefully handled to benefit both foreign investors and the host nation in order for there to be a win-win outcome. This may entail encouraging fair competition, assisting small firms in the community by developing their workforce, and making sure that stringent data protection laws are in place.

Several other factors to consider for investors while investing in retail units are listed below:

• Before involving huge investments, applicants must be prerequisites to check the kind of companies the government allows them to invest in. Because investment in the stock market is volatile and may not recover your loss, leading to unwriggled investment which will not recover at the time of redemption of company loss.
• Additionally, before application applicants need to inspect and ensure that all the requisite documents are submitted online without discovering any omissions and incorrect information within the documents. FDI is largely inspired to bring investors forth along with certain advantages that benefit sectors.

Investors must also need to check eligibility criteria for buying investment in India in sectoral companies.