Multiple changes made in India’s ecommerce FDI norms to promote domestic retailers in the past few years are causing roadblocks to global ecommerce companies like Jeff Bezos-owned Amazon and Walmart-owned Flipkart India’s ecommerce players are compelled to mention the ‘country of origin’ on every product sold across their marketplaces. The government also plans to tighten FDI rules besides banning a seller with a foreign stakeholder. If formalized, these changes will hurt Amazon India the most as it holds indirect stakes in two of its biggest online sellers in India, Appario and Cloudtail. The government also plans to levy a 2 per cent equalization levy or digital services tax on these products.

The rise of Joe Biden led Democratic government in the US has given American ecommerce companies much needed boost to survive the business challenges in India. Both Amazon and Flipkart are getting sufficient support from the current US government. As per government’s Congressional Research Service (CSR) report, the new FDI norms on raising foreign equity caps for insurance and defence and other strides will help India attract foreign investments.

New amendments in FDI rules

However, despite these changes, ease of doing business seems to be far from reality in India. Since 2016, the Indian government has been tightening FDI policies for these e-commerce marketplaces. The latest amendment, known as Press Note 2 (2018), allows 100 per cent FDI in in India’s marketplace model under certain conditions. This entails Press Note 2, ecommerce companies operating marketplaces in India cannot own any of the inventory sold on their marketplace. Also they cannot influence the sale of goods directly or indirectly. Another rule these companies have to abide by is not to hold an equity share in a vendor’s firm that intends to sell on the said e-commerce entity.

No impact of trade relations with other nations

Abhishek Rastogi, Partner, Khaitan & Co is confident India’s investment-related decisions regarding marketplace model will not impact its trade relations with other countries as India has the right to take such calls. He reveals the Indian government plans to simplify FDI norms and direct the management of indirect stakes of these global companies in Indian subsidiaries. The government has initiated a draft ecommerce policy that mandates the approval of nodal ministry whenever changes in ecommerce regulations are made. The policy also aims to invite and encourage foreign investment in ‘marketplace’ model alone. It debars an e-commerce platform with a foreign stakeholder from owning or controlling the inventory on its platform.

Importance of the India-US partnership

The Indian e-commerce space is currently engaged in a swadeshi versus videshi battle. Comparing Amazon to the East India Company, lobby groups are promoting Mukesh Ambani’s Reliance Industries and its subsidiaries under the swadeshi label. On its part, the government plans to promote MSMEs by making certain changes in FDI regulations.

However, despite this, India cannot ignore the Biden government as it needs to acquire a greater access to American products across farming, medical devices and agricultural implements. It also requires a reduction in import duties on some information and communication technology products. In turn, it seeks to resume export benefits to certain domestic products under the GSP, exemption from high duties imposed by the US on steel and aluminium products. It also plans to provide greater access to its products across the agriculture, automobile and automobile components and engineering sectors.

According to Jayant Dasgupta, Former Indian ambassador, WTO, India’s goods and services trade with the US totaled $146 billion in 2019. Exports to the US was $58.6 billion and imports was $87.4 billion. Its FDI in India (stock) increased 8.2 per cent to $45.9 billion in CY2019.

US focus to help India counter China threat

For quite some time now, India has been planning to reduce its trade dependency on China. Last year, it monitored all popular Chinese digital platforms operating in China as well as FDI inflows from Chinese investors. In such circumstances, it needs to support the US by offering trade concessions under the MFN (Most Favored Nation) clause, which also extends to China and many other nations under the WTO guidelines, adds Dasgupta.

India’s future stand on FDI for ecommerce marketplaces depends on its relations with the Biden government. Though the country is free to protect its domestic sellers, the current market size of Amazon and Flipkart requires it to introduce a comprehensive ecommerce policy that has little scope for sporadic changes.

‘RUNway to Skilled India’ the book authored by Dr Darlie O Koshy, DG & CEO, ATDC India will be launched at the International Craft Week’ on from February 18-21, 2021. The formal launch of the book on February 19, 2021, will be attended by Mahendra Nath Pandey, Minister of Skill Development & Entrepreneurship as the chief guest.

The book focuses on India's skilling efforts and how RUN: Re-skilling, Up-Skilling. New-Skilling (RUN SUCCESS) can value add to India's economy while empowering youth and women. This endeavour aims to bring into focus India’s largest traditional skill legacy through crafts which are even today practiced by numerous local communities and have continued to possess the tacit and explicit knowhow and insights learned through ages exemplifying why is so important for India. The book will be available in both hardbound and paperback.

Endorsements came from many of the industry experts, during a prelaunch webinar organized by DFU Publications, such as T.V. Mohandas Pai , Chairman, Aarin Capital and Manipal Global Education says, "The book is a persuasive call to rediscover the innate skills germane to our people and to reorient the skill development in the Country on a sustainable track" and "Dr. Koshy’s new book is a convincing advocacy of the concept of Re-skilling, Up- Skiiling, New skilling, ‘RUN’ as Dr. Darlie Koshy calls it, and the way it has been presented and argued has not been done before", says Ajit Seth, a Former Cabinet Secretary, GoI, likewise among other says Dr. Subroto Bagchi, Chairman of Odisha Skill Development Authority, "I wanted to tell you that I love every sentence of the book. A must read for everyone in the Skill World!”

Dr. (Prof.) Darlie O. Koshy is a visionary Educationist, persuasive administrator, International Speaker and noted author of books like “India Design Edge”. Dr Koshy has an experience spanning 43 years out of which 33 years have been with NIFT, NID, IAM and ATDC (of AEPC).

With the pandemic devastating several businesses and industries in 2020, many retail and offline players are offering customized services online like the Cloud, etc. Prominent amongst these is The Pant Project which offers customized trousers at reasonable rates. Each trouser is personalized according to customers’ measurements and their unique styling preferences. They can choose between slim, tapered and regular (relaxed) fit to find a pair of pants that fit perfectly to their body type.

The customers can add a personal touch to each of these trousers and have their initials monogrammed onto the trouser at no additional cost. The Pant Project also provides free consultation by their personal stylists before and after purchase, where clients can consult the stylist on the ideal fabrics, fits, styles and customizations as per their needs.

Similarly, Delhi-based NAAZ- The Designer Boutique offers consultation services virtually through the digital medium. The boutique provides customers with a demo picture and the size chart as well. The products are made to order and of particular sizes and requirements.

Inspired by international fashion culture, Duke’s Spring/Summer 2021 collection endorses the Indian government’s vision of a Atamnirbhar Bharat.

Featuring light floral and leafy print patterns, the collection is made from value-added materials such as cotton linen, pique, single jersey club as well as un-dyed, natural and textured materials. It offers a wide variety of T-shirts, shirts, denims, trousers, tops, jeggings, activewear, sportswear, accessories and footwear collection.

The color palette is cool and airy with soft blush, lime green and pale blue balanced with sartorial burgundy, navy and many more colors.

It includes cotton or poly cotton fabrics in breezy tones.

The tank tops and grapic printed T-shirts cater to the fashion demands of the teens, young and fashionistas.

The collection also boasts of an exciting color combination, design in stripes, prints, embroidery, patch work, short lengths, round necks. Kuntal Raj Jain, Director, Duke Fashions, explains, the range represents the brand’s continued commitment to offer a complete range of products under a single roof. It offers the season’s latest trends. “Each piece from this collection has the special ‘sparkle of quality’ on which its creators insisted,” Jain explains. The collection is based on the brand’s philosophy of making international fashion available at reasonable prices.

Duke has also updated its Militaire collection’21 for men by adding a wide selection of T-Shirts, polos, shorts, lowers, Bermuda’s and accessories. The brand is a winner of the President Award and three national awards including Excellent Quality Readymade Garments, Outstanding Entrepreneurship and Quality Garments.

It was also crowned Indian Power Brand at the US. Incepted in Ludhiana in 1966, the brand connects with customers through its online operations, big chain stores and over 4,000 MBOs and 400 EBOs nationwide.

In its third quarter ending December 31, 2020, V2 Retail reported total income of Rs.228.46 crore during the period ended December 31, 2020 as compared to Rs.90.30 crore during the period ended September 30, 2020. The company posted a net profit of Rs 13.81 crore as against a loss Rs 7.31 crore during the quarter ending September 30, 2020. EPS increased to Rs.4.04 for the period ended December 31, 2020 as compared to Rs.2.14 for the period ended September 30, 2020.

On yearly basis, V2 Retail reported total income of Rs.228.46 crore during the period ended December 31, 2020 as compared to Rs.220.36 crore during the period ended December 31, 2019. It posted a net profit of Rs 13.81 crore during the period ending December 31, 2020 as against net loss of Rs 20.75 crore duing the period ending December 31, 2019.

Its EPS declined to Rs.4.04 for the period ended December 31, 2020 as compared to Rs.6.09 for the period ended December 31, 2019.

The pandemic has brought in a shift in consumer behaviour, providing a major fillip to India’s e-commerce industry that is now poised to touch $90-100 billion in the next 3-4 years. While challenges brought in by the pandemic impacted businesses, many new avenues also opened up.

The opportunities that modern retail present are significant for businesses of all sizes, including the kirana ecosystem. E-commerce platforms are also doing its best to help small businesses and artisans embrace the power of technology and be a part of the modern retail opportunity.

E-commerce has been gaining traction over the years and in 2019, more than 10 per cent Indians had already shopped something online. This trend was further accelerated after the lockdown forced people to stay indoors. Many turned to online platforms for buying grocery and other essentials during this time and have continued to do so after the lockdown was lifted.

Almost 100 per cent pin codes in India have seen e-commerce adoption. This includes categories like fashion, appliances, furniture, etc. More than 60 per cent of transactions and orders in India come from tier two cities and smaller towns. Industry experts still believe that they are scratching the surface when it comes to e-commerce adoption in India. Out that only 3.5 per cent of Indian commerce is online as compared to more than 25 per cent e-commerce adoption in China, and other developed economies that have 10-25 per cent adoption rates.

COVID-induced spike in e-commerce has actually changed several categories, there is a new normal. And the meaning of essential categories has also completely changed. It is believed that Indian e-commerce economy has seen a permanent shift for the positive.

Over the next few years, Indian e-commerce economy will be bigger than modern retail today. The pre-COVID growth rates of e-commerce were roughly 26-27 per cent but if you look at the post-COVID estimates, it has gone closer to 30 per cent. In the next three to four years, what the industry was estimating the e-commerce market size was roughly in the range of about USD 50-60 billion, today, the same numbers are actually close to USD 90-100 billion.

The Italian fashion brand, Benetton India plans to open 30 to 40 new stores in the Indian market this year and will also launch its online store in the second half of the year.

Sundeep Chugh, CEO and General Manager, Benetton India, said, the brand aims to get back to its 2019 business performance. In the festival season, business recovered by almost 80 to 85 percent compared to the same period in the previous year. The e-commerce channel is growing with a high double-digit CAGR due to the low penetration. Benetton India will continue to use this opportunity in the right way.

The brand entered India back in 1991 and has a network of around 350 physical stores throughout the country. It further aspires to grow online and offline, and capture more of the offline Indian market in 2021.

Gautam Singhania, Chairman & Managing Director, Raymond believes the Budget would boost India’s economic growth besides easing the process of doing business in the country. Singhania particularly appreciated the government’s decision to set up seven new textile parks under the Mega Investment Textile Parks scheme.

The increased outlays on infrastructure would help India create world-class infrastructure, he said. He also welcomed the government’s move to double the allocation for MSMEs to Rs 15,700 crore.

Singhania also hailed the government’s decision to introduce an alternate debt resolution mechanism and a special framework. The government also proposes to reduce the margin money requirement from 25 percent to 15 percent for startups.

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And IBEF report suggests India is the world’s fifth-largest global destination in the retail space. The entry of top players has made the sector one of the most dynamic and fast-paced with total consumption expenditure expected to be worth $3,600 billion by 2020 from $1,824 billion in 2017. It accounts for over 10 per cent of the GDP and around eight per cent of employment.

As per United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019 India stood 73rd and is the fifth largest global destination in retail spaces; 63rd in World Bank’s Doing Business 2019.

A promising and growing market

The IBEF report highlights India’s retail sector was worth $950 billion in 2018 growing at CAGR of 13 per cent and it is expected to reach $1.1 trillion by 2020. Online retail sales were forecasted to grow 31 per cent annually to $32.70 billion in 2018. Revenue were projected at reach $60 billion by 2020.

Revenue from brick and mortar retail was expected to reach Rs 10,000-12,000 crore ($1.39-2.77 billion) in FY20. And as per consulting firm RedSeer’s study the retail sector was expected to recover 80 per cent of pre-Covid revenue ($780 billion) by end-2020. In fact, after a 19 per cent drop in the January-March 2020 quarter, the FMCG industry recovered in July-September 2020 quarter with a y-o-y growth of 1.6 per cent.

As per Department for Promotion of Industry and Internal Trade from April 2000-June 2020, the retail sector received FDI equity inflow worth $ 2.17 billion. In 2019 PE funds worth $970 million were channelled to the retail sector. Many global PE funds have been attracted by Indian retail for example, in September 2020, US private equity firm Silver Lake announced plans to invest Rs 7,500 crore ($1.00 billion) in Reliance Retail, the second billion-dollar investment by Silver Lake in a Reliance Industries subsidiary after the $1.35 billion investment in Jio Platforms in 2020. Walmart Investments Cooperative invested Rs 2.75 billion ($37.68 million) in Wal-Mart India.

And what given the sector an edge are the various government initiatives to improve the industry. One of these is allowing 100 per cent FDI in online retail and services through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in India.

As ecommerce expands in the country, retailers need to leverage digital channels, which would push them to spend less on expensive real estate while reaching out to more customers in smaller cities. By 2021, traditional retail is expected to hold 75 per cent share with organised making up 18 per cent and e-commerce 7 per cent of the total retail market. The long-term outlook for the industry is positive, with rising income, favourable demographics, entry of foreign players, and increasing urbanisation, sums up IBEF.

As per a report by Unicommerce and Kearney, India’s e-commerce activities in Q4 FY2020 grew by 36 and 30 per cent year-over-year (YOY) in terms of order volume and gross merchandise value (GMV), respectively. However, the average value of orders declined by 5 per cent as compared to same period last year. Categories like personal care, beauty and wellness as well as FMCG and Healthcare were the biggest beneficiaries with volumes growing by 95 percent and 46 percent YoY, respectively.

Tier II and III cities accounted for 90 per cent YoY incremental volume and value growth. While brand websites reported 94 per cent volume growth in Q4 2020 as compared to same period last year. The FMCG and pharma category reported growth of 92 per cent on the brand website and 62 per cent growth on the marketplaces.

Focusing on health and well-being of citizens, physical and financial capital and infrastructure, inclusive development for aspirational India, innovation and R&D, minimum government, maximum governance are some of the highlights of the Union Budget for the financial year 2021-22.

Finance Minister, Nirmala Sitharaman allocated Rs 15,700 crore for the Ministry of Micro, Small and Medium Enterprises (MSME) sector. She also proposed to reduce the money requirement under the Stand Up India scheme for the Scheduled Castes and Scheduled Tribes from 25 per cent to 15 per cent besides approving loans for activities in allied activities in agriculture.

Scheme for new textile parks

In view of global pandemic, the Budget also introduced a new scheme for setting up mega textile parks in the country. These parks will help the government position India as a fully integrated, globally competitive manufacturing and exporting hub for the sector.

Under this scheme, the government has sanctioned 59 integrated textile parks, of which 22 have been completed. The textile ministry also plans to set up a Mega Integrated Textile Region and Apparel (MITRA) Park, spread over 1,000 acres with state-of-the-art infrastructure, common utilities and Research and Development (R&D) lab. The government has also approved production-linked incentive (PLI) scheme for 10 key sectors including textile and automobiles which would help India become self-reliant, boost manufacturing and enhance exports. The scheme takes the total government outlay for such incentives to nearly Rs 2 lakh crore over a five-year period.

Apparel and denim maker, Kewal Kiran Clothing reported a six per cent decline in net profit to Rs 11 crore ($1.5 million) in the quarter ended December 2020, as against Rs 12 crore it reported in the corresponding quarter last year.

According to a brand statement Covid-19 outbreak across the globe and in India has resulted unprecedented steps to combat it. Consequent to the nationwide lockdown from March 23, 2020, the company had to shut clown factories and stores and all operational activities across locations, impacting the business during the quarter.

Kewal Kiran owns brands like Killer, Integriti, LawmanPg3, Easies, and Desi Belle. The company currently has 336 retail stores 210 cities across 25 states and sells on leading e-commerce platforms across India.