Might Is Right? Amazon, Walmart Press For ‘Concessions’ In India’s New E-Commerce Rules; Centre Plays Safe

The United States government is fretting over the new e-commerce laws of India that hinders the plans of Amazon and Walmart, which recently acquired 77 per cent of Flipkart, sources told Reuters, reports Financial Express.

India’s revised e-commerce investment rules starting from 1 February ban companies from selling products from firms in which they hold an equity interest. They also stop them from making deals with sellers to sell exclusively on their platforms. These rules have become troublesome to Amazon and Walmart, which bought the 77 per cent stake in Flipkart for $16 billion last year since it would force them to change their business structures in the country and raise their operational costs.

A Washington-based source aware of the companies’ thinking has stated that there is an undercurrent to make this into a bilateral issue since they feel it has gone beyond being a local issue.

An Indian trade ministry official told Reuters that a month ago, a US government official had told Indian counterparts to protect Walmart and Flipkart’s investments in India. The US government stressed that the companies should be given concessions in view of “good relations” and “bilateral trade”, with India giving a noncommittal response.

However, PM Modi is unlikely to amend the rules in a meaningful way, since it would affect crores of small traders, who view Walmart and Amazon as a threat to their business, and who form the core voter base that will likely affect his chances of re-election in 2019. The companies have requested the government to delay the policy implementation, but to no avail as of yet.

Walmart, Amazon and lobbying groups are engaging with the Office of the United States Trade Representative (USTR) and the local embassy over their dissatisfaction with the policy. Walmart’s spokesman Greg Hitt said they have engaged with the US administration on this issue. Amazon India announced that it would comply with the local policies but needs time to understand its implications.

Praveen Khandelwal, the secretary-general of the Confederation of All India Traders described the pressure of the companies on government as “desperate” and that any change would affect millions.