NEW DELHI/NEW YORK: The US government is concerned about India’s revised e-commerce regulations and has told officials in New Delhi the policy will hinder the Indian investment plans of Amazon and Walmart, three sources familiar with the talks told Reuters.The tussle marks the latest in a number of US protests over Indian government policies that impact American companies and comes at a time when the two countries are trying to iron out other trade irritants. In 2017, the US had lodged a written protest against the New Delhi’s decision to cap medical device prices, which upset American companies.
India’s e-commerce investment rules, which kick in from February 1, ban companies from selling products via firms in which they have an equity interest and also bar them from making exclusive deals with sellers.
The policy has dealt a blow to Walmart, which just last year invested $16 billion in buying 77% of Flipkart, and Amazon too as it would force them to change their business
structures in India and raise their operational costs.
“There is a very strong undercurrent as to how this should be made a bilateral issue,” said a Washington-based industry source aware of the companies’ thinking. “This has gone way beyond being a local (India) tussle.”
A US government official earlier this month told Indian officials to protect Walmart and Flipkart’s investments in the country, an Indian trade ministry official told Reuters.
The US government cited “good relations” between the two countries and stressed that American companies should be given concessions in the larger interest of bilateral trade, but India gave a “non-committal” response, the source added. But Prime Minister Narendra Modi is unlikely to delay the revised rules or amend them in any meaningful way as he is seeking the support of the tens of millions of small retailers and traders in India ahead of a general election. The small firms see Walmart and Amazon as a threat to their businesses.