The first draft of the national e-commerce policy which bats for equal footing for domestic and international players has reportedly sent alarm bells ringing among the foreign-owned companies operating in India - Amazon and Walmart.
A lion's share of the Indian e-commerce market - over 70 per cent - has been cornered by Amazon and homegrown rival Flipkart, which is in the process of being acquired by Walmart. Citing industry executives in the know, The Economic Times reported that these US-headquartered behemoths feel the draft ecommerce policy is "heavily tilted" against foreign firms. So they are likely to ask the United States government to reach out to Indian policymakers in case the final policy is "not moderated", the two sources added.
US President Donald Trump has previously used the Harley-Davidson brand to lash out against India's high import duties, so nobody will be surprised if he chooses to make an example of Walmart and Amazon as well to push for fair play. "We expect a barrage of letters to be exchanged between US authorities and the Indian government, in case the policy doesn't become more even-handed," a source told the daily.
The report added that while the draft proposal contains a number of proposals that have left foreign players in the sector worried about an "uneven playing field", the proposed ecommerce regulator has been cited as "the biggest concern". The fear is that introducing a regulator may slow down decision-making and impede business operations.
Meanwhile, the proposal to bar foreign-owned ecommerce companies from holding inventories has officials drawing parallels with China. The draft recommends that Indian-owned and Indian-managed marketplaces be allowed the option of holding inventories, provided the goods sold are entirely domestically produced.
Another key aspect hugely impacted by the draft policy is discounts - a strategy that has been instrumental in steering people away from offline retailers to ecommerce sites. In an attempt to boost Indian online enterprises, the government has proposed that deep-rooted discounts be stopped from a particular date as part of the e-commerce policy draft.
Significantly, the draft mentions that bulk purchases of branded goods like mobile phones, white goods, fashion items "by related party sellers which lead to price distortions in a marketplace" will be prohibited. If this is accepted in the final policy, it may seriously affect the sale strategies of the ecommerce biggies.
Both Amazon and Walmart are looking at making big investments in India. Amazon has pledged to invest about $5 billion and Walmart has agreed on a $16 billion deal to buy a 77 per cent stake in Flipkart.