Structuring Of eCommerce Businesses in India

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This paper is aimed at educating entrepreneurs and investors about the many different structures that are being used Indian E-commerce businesses to raise venture capital, and is brought to you by Arkay & Arkay ( and MediaNama (


Over the past few years, business on the Internet in India has grown on the back of a growth in online commerce in the country: e-commerce ventures have delivered growth by bringing more buyers to the web, and more importantly creating happy customers. Venture capital funding has allowed businesses to spend both on online marketing, thus providing significant growth in revenues to online publishers, advertising networks and Google (via search marketing). More professionals from retail have joined Internet business, given the promise of quick growth, as well as potential exits. Numerous logistics and delivery businesses have cropped up to support this growth, and the next wave, it appears, will be in businesses that help in customer retention and lower cost of customer acquisitions through loyalty programs.

Given the success of a e-commerce ventures like Flipkart, Infibeam, Homeshop18, Myntra and a few others, many more have mushroomed. It remains to be seen whether the customer demand can sustain all of the upstarts: many are struggling to sell inventory, and there is bound to be consolidation in the near term. That said, the fact that there is demand for e-commerce, or that customers find greater variety and value online cannot be doubted. There is room for growth as as more and more customers come online, whether the Internet, or to the mobile Internet as wireless data penetration increases in the country.

In all of this, recent developments have raised questions about the legality of e-commerce businesses in India, given that there are restrictions in foreign direct investment in multi-brand retail.

About Arkay & Arkay (

Arkay & Arkay, Chartered Accountants is a full service advisory firm, based out of New Delhi.
We offer specialized services in the domains of Direct and Indirect taxation, Audit and Assurance, India Entry Advisory, Risk Advisory and other allied services to domestic and global business of all sizes. Our core practice areas include Mergers & Acquisitions ,Tax Litigation, International Tax Advisory, Fund Advisory, Domestic Tax Advisory and Compliance, Service Tax advisory, Statutory Audits, Corporate law advisory and Compliance, Internal Audits etc.

Our team comprises of Chartered Accountants, Lawyers and MBAs working together to provide our clients the best value through practical and innovative solutions.

About MediaNama (

MediaNama is the premier source of information and analysis on the Telecom and Digital Media business in India. We provide news, opinion and analysis on Mergers & Acquisitions, Venture Capital Funding, Government Policy, New products and services, Industry Research, Joint Ventures and other business developments related to Internet and Mobile communities, and content including music, gaming, video and more.

Our key focus is on digital content, it’s carriage and monetization, and on covering issues that have an impact on the digital ecosystem in India. We also organize #NAMA: India's premier digital thought leadership summit.