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
Correct Answer
C
Both 1 and 2
D
Neither 1 nor 2
Explanation
Statement 2 is correct because India’s FDI policy limits the degree of ownership and control e-commerce entities can have over sellers to prevent them from influencing prices or supply. Statement 1 is incorrect—the most common misconception—because foreign-funded firms are strictly prohibited from the "inventory-based model" and cannot sell their own goods directly on their platforms. The core concept tested is the regulatory distinction between marketplace and inventory-based e-commerce models under India's Foreign Direct Investment (FDI) guidelines.
E-commerce PolicyFDI in E-commerce, Marketplace ModelForeign-owned e-commerce firmsIndiasell own goodsplatformsmarket-placesbig sellerslimited ownership