Ecommerce majors Amazon and Walmart feel India’s draft ecommerce policy is “heavily tilted” against the foreign firms and may seek the help of the US in case the final policy is not moderated, sources told. “We expect a barrage of letters to be exchanged between US authorities and the Indian government, in case the policy doesn’t become more evenhanded,” according to the sources.
“Welcome to China,” one of the sources told , referring to one of the proposals in the policy which allows Indian-owned and Indian-managed marketplaces the option of holding inventories. The executive was referring to the proposal in the draft policy that allows Indian-owned and Indian managed marketplaces the option of holding inventories (provided goods sold are entirely domestically produced) but makes no such concession for foreign-funded firms.
“This policy at least shows a direction that we want to go the Chinese way,” the executive quoted earlier said, adding the proposed regulator is the “biggest concern” for them.
The online retailers see India as a top market for e-commerce and both of them have been gearing up to expand their business in the country. Amazon has pledged to invest about $5 billion in India and Walmart in May agreed to acquire a controlling 77 percent stake in Amazon’s local rival Flipkart for $16 billion.
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Their desire to widen their horizon in India, however, seems to face a roadblock due to the stringent e-commerce policy. The foreign e-commerce companies fear that the proposed e-commerce regulator may “create an uneven playing field” and intervene in decision-making that may lead to a slowdown in business operations. Ecommerce in India may become a diplomatic battleground.
People familiar with current thinking in Amazon and Walmart told there will be plenty of government-to-government talks on this issue. “We expect a barrage of letters to be exchanged between US authorities and the Indian government, in case the policy doesn’t become more evenhanded,” one person said.
India is mulling a single legislation to address all aspects of e-commerce regulation, and it is also exploring the idea of setting up a single regulator to consider all sector-related issues, according to a Draft National Policy Framework on e-commerce.The draft policy lists several proposals including allowing Indian-owned and Indian-managed marketplaces the option to hold inventories but making no such concession for foreign-funded firms.
Other proposals listed in the draft e-commerce policy include barring bulk purchases by “related party sellers” of branded goods like mobile phones and white goods that lead to price distortions in the marketplace. The draft proposes that group companies of e-commerce firms cannot take actions that influence or distort the final process.
If implemented, these laws may impact sale strategies of big e-commerce players like Amazon and Flipkart as they purchase in bulk and then sell those goods to large vendors. As of now, the government has opened the draft policy for public consultations, but no timeline has been given on when a final policy will be framed.
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