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 ✓ UPSC's answer
Why the answer is (d)
• India allows 100% FDI in the marketplace model of e-commerce but not in the inventory model (Press Note 2, 2018).
• Statement 1 is wrong: a foreign-owned marketplace may only run a platform linking buyers and sellers; it cannot own inventory and sell its own goods.
• Statement 2 is wrong as worded: it is not a question of a limited degree of ownership. A marketplace entity or its group companies may not hold equity in sellers on the platform at all; such sellers are barred from selling there.
• Hence neither statement is correct, option (d) — the official UPSC answer.
Why the other options are wrong
- (a) 1 only
- A foreign-owned marketplace cannot sell its own goods; the inventory model is closed to FDI.
- (b) 2 only
- Equity in platform sellers is barred outright, not merely limited.
- (c) Both 1 and 2
- Neither statement is correct.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2022, held on 5 June 2022. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.