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Entering the Indian Market:
• Foreign E-commerce or a drop shipping companies can enter the Indian Business Market under Direct and Indirect way:
a) Direct way: The direct way for a foreign e-commerce company to enter into the Indian market is through Foreign Direct Investment. 100 per cent FDI is allowed in e-commerce companies operating in single brand retail trading. Along with this it is also necessary for these companies to operate in the market place model only which acts as a facilitator between the buyers and sellers. The FDI policy prohibits foreign investment in the inventory model. This applies to foreign drop shipping companies as well as drop shipping is a platform which connects the buyers and sellers.
b) Indirect way: Another way to enter the Indian Market is through Indirect Foreign Investment. This is when an Indian company having foreign investment is owned or controlled by a foreign entity, invests in another Indian Company. A foreign e-commerce or drop shipping company can enter into the Indian market through this method as well.
Best Locations:
• Bangalore (Karnataka)
• Delhi
• Maharashtra (Mumbai)
• Telangana (Hyderabad)
• Tamil Nadu (Chennai)
Achievements Made by the Indian Companies or in India:
• India’s e-commerce market has reached about $10-16 billion in the year 2013.
• In the year 2010, Flipkart had introduced Cash on Delivery model (COD) which increased e-commerce reach dramatically.
Demand in the Market:
• The Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017.
• India’s E-commerce revenue is also expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world.
• Online retail sales led by Flipkart, Amazon India and Paytm Mall in India are expected to grow by 31 per cent to touch US$ 32.70 billion in 2018.
Existing Notable Players in The Market- Domestic and Foreign:
• Amazon
• Flipkart
• IndiaMart
Applicable Laws:
• The Indian Contract Act, 1872: This act regulates the various contracts in India.
• Information Technology Act, 2000: This act gives legal recognition to transactions that are carried out through electronic communications.
• Foreign Exchange Management Act, 1999: The main objective is of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
• Payment and Settlements Systems Act, 2007: This act regulates and supervises payment systems in India and designates the Reserve Bank of India (Reserve Bank) as the authority for that purpose and all related matters.
• The Goods and Service Tax Act, 2017: The central government levies and collects tax on intra-State supply of goods or services or both.
• The Competition Act, 2002: This act prevents monopolies and promotes competition in the market. It protects the freedom of trade for the participating individuals and entities in the market.
Documentations and Agreements:
• Vendor Agreement is a legal document that states the stipulation of the work to be performed by a contractor for the business. It sets the provisions regarding the type and quality of services to be provided, duration, cost, liability, etc. of the vendor’s services.
• Service Level Agreement is a contract that establishes a set of deliverables that one party has agreed to provide another. This agreement can exist between a business and its customers, or one department that delivers a recurring service to another department within that business.
• Master Service Agreement is an agreement which permits the buyer and seller to quickly negotiate future transactions or agreements because they can rely on the terms of the master agreement, so that the same terms need not be repetitively negotiated, and to negotiate only the deal-specific terms.
• Non-Disclosure Agreement is a legal contract stating that certain information is confidential, and the extent to which its disclosure is restricted to third parties. Confidential information includes trade secrets, business plans, business methods and strategies, drawings, charts and more.
Authored By: Adv. Anant Sharma