Caveats in virtual commerce FDI initiatives – written by ankit bhatia

Bonjour !

Well .. the resonating perpetual conjectures in fiscal factions – on absolute direct investment route in virtual commerce – being clad in statutory form – have culminated towards an official statutory initiative !

Statutory veracity officially rendered upon the much anticipated – ‘Absolute Foreign Direct Investment’ route including incorporating subsidiary corporate relationships in the virtual commerce sector !

Kudos is the slogan in vogue – of the day!  Though with solitary caveat   ;P

Absolutely concur with the pro-initiative squad’s applause – attributable to the consequent dispersal, proliferation, relatively equitable distribution of wealth merits – to be conducive – especially in fiscal jurisdictions – vulnerable in terms of infrastructure – to access markets across country and globally !

Unanimously endorse that this would culminate into an unprecedented milestone – the epitome of messiah of vulnerable sectors, mobilizing the cosmic range of opportunities of virtual access platforms – in terms of ameliorating the state of vulnerable value addition ventures – dispersed across jurisdictions – which have been gradually decaying since ages – in terms of meagre resources, consequent domestic/global market access capabilities vs resourceful players ! Would be especially conducive to amelioration of domestic value addition sector – of handicraft or other Indian craftsmanship – which possess an inherent massive exports, forex value – though were hitherto impeded by resources, access issues!

Another feather in the cap of this statutory initiative has been boasted to ensure determination of fair commercial valuations in terms of pricing by other virtual players – by commencement of productive adversary ship in virtual commerce sector ! Would ensure equilibrium in terms of monopoly / duopoly scenarios !

Solitary caveat discernible, at moment, impeding the blossoming of this initiative, to its potential, seems the perpetual legal ambiguity, federal systemic hurdles – that have prevailed – attributable to the federal levies, systems in certain federal jurisdictions! For instance, certain adhoc federal levies, impediments were being incorporated in value chain system of this sector via irrational federal initiatives – in terms of levies or systemic impediments! Consequently, the sector initiated boycott of those specific federal jurisdictions – consequence being to the prejudice of such jurisdictions – inability to mobilize the synergies!

The legal ambiguity aspect, though, seems, inconceivable, since the law has prevailed settled in view of court judgments, and Union, Federal legislation ! Subsequent to constitutional amendments regarding CST, any transaction in purview of Section 3 / Section 2 – ‘occasions movement from ..’ – has been in the purview of Union legislation, and others in purview of Federal legislation !


Another applaudable visionary sub-initiative incorporated in this statutory initiative has been the allowance of FDI investment route – exclusively to that virtual commerce model which encompasses provision of virtual access platform, to the exclusion of the business model – wherein transactions are on ‘ownership’ or ‘principal to principal’ based ventures ! Kudos !


However, to mobilize the cosmic synergy capabilities – attributable to this initiative, federal systemic / fiscal impediments ought be addressed on priority, to consequently ensure impediment free system to operate and to be conducive to blossoming of this marvelous initiative !

Let optimism prevail ..

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