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:

The correct option is 2 only.

Let us analyze the statements step-by-step to understand why they are correct or incorrect under India's Foreign Direct Investment (FDI) policy for the e-commerce sector:

Statement 1 is incorrect:
According to India's FDI policy, foreign-owned e-commerce entities are only permitted to operate under the marketplace model. In a marketplace model, the e-commerce entity acts purely as a facilitator between buyers and sellers by providing an information technology platform. The policy strictly prohibits these foreign-funded marketplace entities from operating under the inventory-based model, meaning they cannot own or sell their own goods directly on their platforms.

Statement 2 is correct:
To ensure fair competition and prevent marketplace platforms from giving preferential treatment to their own associated vendors, the Indian government has placed strict limits on ownership. Specifically, an e-commerce platform cannot permit any seller to sell products on its platform if that seller is owned or controlled by the e-commerce marketplace entity, or if the e-commerce entity has equity participation in that seller's company. Therefore, the degree to which they can own or control big sellers on their platforms is legally limited.

Since Statement 1 is incorrect and Statement 2 is correct, the correct answer is indeed 2 only.