New policy for e-commerce bars companies like Amazon and Flipkart from selling products exclusively on their online portals, manipulating the price of products or offer deep discounts.
Walmart told the U.S. government privately in January that India’s new investment rules for e-commerce were regressive and had the potential to hurt trade ties.
“It came as a total surprise … this is a major change and a regressive policy shift,” Walmart’s Senior Director for Global Government Affairs Sarah Thorn told the Office of the United States Trade Representative (USTR) in an an e-mail on Jan. 7.
The new policy for e-commerce bars companies from selling products only on their online portals and offer deep discounts, in a move towards the interests of small traders.
- Online entities with foreign investments cannot offer products sold by retailers in which they hold equity stake.
- It also mandates online e-commerce giants from stocking 25 per cent of their inventory from a single vendor.
- The government’s new FDI rule has also debarred such online marketplaces from manipulating the price of products or offer deep discounts.
- The lobbying effort yielded no result at the time – India implemented the new rules from Feb. 1.
The new e-commerce policy, implemented by Narendra Modi government months before his re-election in May, was seen aimed to winning the support of small Indian traders.
- Differences over e-commerce regulations have become one of the biggest issues in frayed trade ties between India and US.
- Walmart had invested $16 billion in Indian e-commerce giant Flipkart, its biggest ever acquisition globally.
- In a statement to Reuters, Walmart said it regularly offers input to the U.S. and Indian governments on policy issues and this was a “past issue and Walmart and Flipkart are looking ahead”.
- In the January letter to the USTR, Walmart said it wanted a six-month delay in the implementation of the rules, but that did not happen.
- Walmart told the USTR that India’s new policy wasn’t good for global businesses, highlighting that its FDI would help Flipkart grow and result in “significant” tax revenues for India.
- India’s Commerce Minister Piyush Goyal has said the government was committed to protecting small traders, but open to ironing out policy-related issues.
- Goyal said on Twitter on on Wednesday he had met Walmart International’s CEO, Judith McKenna, and discussed ways of boosting sales of Indian-made products.
- In a closed-door meeting, however, Goyal warned both Flipkart and Amazon to comply with the new rules, and questioned them on their discounting policies, Reuters has reported.
- Walmart told the USTR in January that its unit Flipkart, as well as Amazon, had opened many new distribution centres over the past three years in India, creating jobs and benefiting customers.
By: Abhinav Ranjan, Business Writer, DKODING Media