🧷 Authentic Classroom Explanation by IAS Monk

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📌 The Question:

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 market-places.
2. The degree to which they can own big sellers on their platforms is limited.

Select the correct answer using the code given below:

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

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✅ Correct Answer: (b) 2 only

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🧠 Classroom Explanation

• Statement 1 is NOT correct
  • Under FDI policy, foreign-owned e-commerce entities are permitted only in the marketplace model, not the inventory-based model.
  • Marketplace model means merely providing a digital platform connecting buyers and sellers.
  • Foreign-owned entities cannot sell their own goods directly to consumers in India.
• Statement 2 is correct
  • FDI rules strictly limit ownership or control over sellers.
  • If more than 25% of a seller’s purchases come from the marketplace entity or its group companies, the marketplace is deemed to control inventory, which is prohibited.
  • Hence, the degree of ownership/control over large sellers is legally restricted.

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🔍 Curiosity Raiser

Why do repeated policy tweaks target “control” rather than outright “ownership” in India’s e-commerce regulations?

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🧘 IAS Monk Whisper

In India’s digital bazaar,
foreign capital may build roads,
but cannot own the shops.