Moves by the Indian government to place new restrictions on foreign investment in the e-commerce sector reportedly carry the risk of a $46bn reduction in online sales by 2022, according to draft analysis by PwC, the international consultancy firm.
First reported by Reuters, the private PwC analysis forecasts that the gross-merchandise value of goods sold online could fall by $800m from current expectations in the current fiscal year that ends in March.
Online sales would then decline by $45.2bn below current forecasts over the next three years, although Reuters pointed out that online sales would continue to grow – just at a lower rate of growth than forecast before the policy change takes effect.
Reuters added that the PwC analysis also warns that the policy change could result in 1.1 million fewer jobs than would otherwise have been expected and lead to a reduction in collectable tax worth $6bn.
Due to come into force from 1st February, the new measures, which the Indian government announced at the end of December, will prohibit e-commerce firms operating in India from selling products via companies in which they have an equity interest. They are also prevented from signing exclusivity deals with sellers.
They are expected to hit companies like Amazon, which is committed to investing $5.5bn in India, as well as Walmart-owned Flipkart, and are inspired by concerns for India’s huge network of small traders and shopkeepers, who form a key voting block ahead of a general election in May.
Amazon and Flipkart have both sought an extension to the 1st February deadline, but a source at India’s commerce ministry told Reuters that the government was unlikely to agree to one.
The Confederation of All India Traders (CAIT) also said it would strongly oppose any changes to the new e-commerce policy, while also condemning PwC over what it called its “baseless” and “concocted” study that was designed to “mislead” the country, APN News reported.
“We highly refute the said report and analysis and challenge the PwC for an open debate on this report at any open platform,” CAIT said in a statement. “PwC is attempting to mislead the nation and policy makers to help global e-commerce players.”
Referring to the draft analysis, PwC India told Reuters that it “does not endorse any of these assumptions or conclusions, nor have we conducted any independent study on this”.
First reported by Reuters, the private PwC analysis forecasts that the gross-merchandise value of goods sold online could fall by $800m from current expectations in the current fiscal year that ends in March.
Online sales would then decline by $45.2bn below current forecasts over the next three years, although Reuters pointed out that online sales would continue to grow – just at a lower rate of growth than forecast before the policy change takes effect.
Reuters added that the PwC analysis also warns that the policy change could result in 1.1 million fewer jobs than would otherwise have been expected and lead to a reduction in collectable tax worth $6bn.
Due to come into force from 1st February, the new measures, which the Indian government announced at the end of December, will prohibit e-commerce firms operating in India from selling products via companies in which they have an equity interest. They are also prevented from signing exclusivity deals with sellers.
They are expected to hit companies like Amazon, which is committed to investing $5.5bn in India, as well as Walmart-owned Flipkart, and are inspired by concerns for India’s huge network of small traders and shopkeepers, who form a key voting block ahead of a general election in May.
Amazon and Flipkart have both sought an extension to the 1st February deadline, but a source at India’s commerce ministry told Reuters that the government was unlikely to agree to one.
The Confederation of All India Traders (CAIT) also said it would strongly oppose any changes to the new e-commerce policy, while also condemning PwC over what it called its “baseless” and “concocted” study that was designed to “mislead” the country, APN News reported.
“We highly refute the said report and analysis and challenge the PwC for an open debate on this report at any open platform,” CAIT said in a statement. “PwC is attempting to mislead the nation and policy makers to help global e-commerce players.”
Referring to the draft analysis, PwC India told Reuters that it “does not endorse any of these assumptions or conclusions, nor have we conducted any independent study on this”.
Sourced from Reuters, Indian Express, APN News; additional content by WARC staff
