NEW DELHI: E-commerce in India could become a point of diplomatic conflict between the US and India as both Amazon and Walmart criticise a Modi administration draft e-commerce policy.
Ironically, the draft policy, which seeks to put Indian companies first, appears to be an example of two countries’ protectionist policies colliding. According to the Economic Times, the policy would allow 100% foreign direct investment into marketplace e-commerce models but would limit investment in inventory-based models.
Meanwhile, further clauses of the draft bill would echo Europe’s data protection laws, and would demand that any personal or community data collected in India would have to be stored in India. The purpose is to create a level playing field.
For foreign e-commerce players like Amazon and Walmart the law in its current state could prove deeply problematic. The former has pledged to invest around $5 billion into the country, which it considers a crucial future market. Walmart has agreed to acquire a controlling stake in rival platform Flipkart for $16 billion. Together, Amazon and Flipkart make up 70% of the country’s e-commerce market.
“Welcome to China,” one senior executive at an e-commerce firm told the Economic Times. Such companies are worried that the enhanced oversight afforded to the regulator in the draft law would bog down decision-making. Others worry that the policy would go against its stated intentions and might “create an unlevel playing field.”
“You make big investments into a country keeping in mind the laws of the land and those can’t keep changing,” the executive continued.
Other industry sources questioned the legitimacy of the policy and the potentially negative impact that it might have on e-commerce in India. “Will the government or the regulator now decide when an e-commerce company can give monsoon sale and for how long? To protect 25% of the industry the government is trying to kill 75% of it,” one source said.
Though the government has said that the draft policy will be open for public consultation, and the fact that there is no timeline on when a final policy will be put to parliament, commentators are expecting the United States to object.
Sourced from the Economic Times; additional content by WARC staff