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US Govt says India’s new FDI in ecommerce policy will affect Walmart, Amazon’s India investments: report

The United States government is concerned that India’s new FDI in ecommerce policy will harm Walmart and Amazon’s investment plans in India, reports Reuters.

  • According to Reuters’ sources, a US government official told Indian officials to protect Flipkart and Walmart’s investments in India.
  • Further, the US government suggested that American companies be given concessions in the interest of bilateral trade between the two countries, a suggestion to which India gave a “non-committal” response.
  • Another Washington-based source told Reuters that both Amazon and Walmart have been thinking over how the policy could be made a bilateral issue between the two countries. “This has gone way beyond being a local (India) tussle,” the person said.

Moreover, an Indian industry source said that Walmart, Amazon and lobbying groups are working with the Office of the United States Trade Representative (USTR) and the US embassy to oppose the policy.

A Walmart spokesperson admitted that the company has engaged with the US administration on the issue, while Amazon said it needed adequate time to understand the policy, although it is committed to complying with Indian laws.

Earlier this month, both Amazon and Flipkart sought another 4 and 6 months respectively from the Union government to comply with the policy.
The implementation deadline of the policy may not be extended beyond February 1 on face value, as it is seen as bringing relief to small traders/shopkeepers, who form a critical voter base for PM Narendra Modi. However, an ET report from today states that there is a possibility of an extension of two months.

Opposition from offline unions

Today, the Confederation of All India Traders (CAIT) wrote to PM Modi urging him and the Commerce Ministry to not defer the implementation of the new policy, per Business Standard. It asked the government to not give in to the “pressure tactics” of e-commerce companies, and that the new rules would enable “crores of families who have been adversely impacted economically” to return to business in a “fair environment.”

  • Within the last week, CAIT asked the Union Commerce Minister to halt Amazon’s acquisition of hyperlocal supermarket chains More from Aditya Birla Retail Ltd, and to order a probe into the deal.
  • CAIT also wrote to minister asking that e-commerce players be asked to submit certificates declaring their compliance with the new FDI in e-commerce policy.
  • CAIT had also opposed the scrapping of the original e-commerce policy, and asked that it be implemented before the festive season of Diwali. It had also opposed Walmart’s acquisition of Flipkart.
  • Earlier this week, the Swadeshi Jagran Manch passed a resolution within its organization asking for an ecommerce policy which would lean towards small retail traders and protect their interests.

The new FDI in e-commerce policy

Announced in late December last year, the new policy disallows e-commerce players to control inventory of the vendors. Additionally, vendors which are owned and controlled by the e-commerce company cannot trade on the marketplace.

FDI in the Ecommerce policy: Vendor neutral rules for marketplace-owned vendors

Previous lobbying efforts, IndiaTech.org

This will not be the first time that Amazon has lobbied the government. In 2014, Amazon lobbied US government agencies for the second quarter in a row, on issues related to foreign direct investment in India, international data flows and free trade agreements, according to a lobbying disclosure for the quarter filed by the company. The company had spent $960,000 lobbying for similar issues in the previous quarter.

Meanwhile, in September 2017, Indian ecommerce and Internet companies such as Flipkart, Ola, MakeMyTrip, Quikr, and Hike Messenger banded together to launch an industry body – Indiatech.org – to lobby or battle against ‘deep pocketed’ global competitors for ‘fair market’ in the country.

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