The central government on Tuesday announced 100% foreign direct investment, or FDI, in the marketplace format of e-commerce retailing in an attempt to woo foreign investors, reported PTI. Guidelines released by the Department of Industrial Policy and Promotion said that FDI has not been allowed in the inventory-based model of e-commerce, reported PTI.

According to the DIPP guidelines, the marketplace model of e-commerce is one where the e-tailer acts as a facilitator between buyers and sellers via a digital platform or network. The inventory-based model is where the inventory of goods and services is owned by the e-commerce entity and sold to consumers directly.

At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India, while homegrown players like Flipkart and Snapdeal have foreign investments even as there were no clear FDI guidelines on various online retail models. The new rules bring clarity to a sector where there was none.