What is the Indian e-commerce market entry model? Evaluation of the Indian e-commerce market entry model

Generally speaking, Chinese sellers who sell directly through foreign entities sell products to consumers in India through independent websites or e-commerce platforms outside of India, using a direct logistics model.

Advantages: No need to build inventory, prevent inventory backlogs, and no need to cooperate directly with local Indian companies.

Disadvantages : The overseas direct delivery logistics model takes a long time, is expensive, and has high tax costs, which is an average of 30% of the selling price. It is not suitable for products with low unit prices; it cannot meet the requirements for refunds and returns, affecting customer experience. It is applicable to "Significant Economic Presence (SEP)", which will be the focus of Indian government supervision in the future.

In accordance with India's FDI regulatory requirements, some Chinese sellers look for local partners in India to jointly set up Indian entities, transport goods from abroad to India, and then use the Indian entities to open stores on Indian e-commerce platforms for sales, such as Amazon India, or sell to Indian wholesalers according to the B2B sales process, and finally sell to consumers, completing the entire sales chain.

Advantages: Effectively improve logistics efficiency and costs, and enhance the purchasing experience of local buyers. The tax rate is slightly lower than that of foreign physical sales, averaging 23% of the selling price.

Disadvantages: According to Indian FDI regulations, Chinese sellers can only hold 49% of the shares in the Indian entity established by Chinese sellers and their Indian partners, which may lead to repayment risks and unfair transactions. Chinese sellers need to have a certain understanding of local laws, regulations and cultural customs.

The direct delivery model is relatively costly and small in scale. Considering taxes, costs, and compliance, the second model of selling through Indian entities is more suitable for the needs of Chinese sellers at this stage. However, the local knowledge and relationship network required for this model are very complex.