Indian group says minister pledges strict foreign investment rules for e-commerce

Platform News: India and the Indian platform economy

A group representing millions of brick-and-mortar retailers in India has said it has received government assurances that stringent changes will be made to foreign investment rules for e-commerce, a move that could hit Amazon and Walmart.

Journalists at our partner news agency Reuters exclusively reported this week India was considering revising the policy after complaints from traders who accuse Amazon and Walmart Inc’s Flipkart of creating complex structures to bypass investment rules. The US companies deny any wrongdoing.

The Confederation of All India Traders (CAIT) said in a statement that its delegation held a meeting late on Thursday with Indian Commerce Minister Piyush Goyal, who told them a “strenuous exercise” was underway to issue new foreign investment rules.

“Mr Goyal told us the government will address concerns about alleged violations of current rules. The new rules will be issued shortly,” Praveen Khandelwal, secretary general of CAIT told journalists.

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CAIT says it represents 80 million retail stores in India.

India’s ministry of commerce did not immediately respond to a request for comment on CAIT’s statement.

India’s e-commerce retail market is seen growing to $200 billion a year by 2026, from $30 billion in 2019, the country’s investment promotion agency Invest India estimates.

Unhappy domestic traders say foreign e-commerce businesses indulge in unfair business practices that use steep discounts to target rapid growth, allegations the companies deny.

Amazon and Flipkart were last hit in December of 2018 by investment rule changes that barred foreign e-commerce players from offering products from sellers in which they have an equity stake.

Now the government is considering tweaks to prevent those arrangements even if the e-commerce firm holds an indirect stake in a seller through its parent, Reuters reported.

The government is also considering prohibiting online sales by a seller who purchases goods from the e-commerce entity or its group firm, and then sells them on the entity’s websites.

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Amazon and Flipkart did not respond to a request for comment. On Tuesday, reacting to the story, Amazon had said “any major alterations” to the investment policy will adversely impact small- and medium-sized businesses.

The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Aditya Kalra and Krishna Das in New Delhi. Editing by Emelia Sithole-Matarise.

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