- According to the plan, the Indian government also aims at having changes that will prohibit online sales from a seller who buys goods from the e-commerce trading firms.
- Analysts have warned that the move will adversely affect the local economy.
- It is alleged that some of the major players in the industry have started pulling out their products from their online platforms.
India is planning to revise its foreign investment rules for e-commerce, a move that could see major players in the industry like Amazon re-structure their ties with major sellers. The new rules and regulations by the Indian government are aimed at restricting how e-traders conduct their e-commerce in the country, a major step in protecting the local traders.
According to the plan, the Indian government also aims at having changes that will prohibit online sales from a seller who buys goods from the e-commerce trading companies.
The government has received support from the country’s political and trade organizations that have continued to lobby for small traders who are greatly affected by cheaper e-commerce trading. These organizations include Swdeshi Jagran Manch (SJM) and Confederation of All Indian Traders (CIAT).
Domestic traders in the country have always viewed e-commerce as a threat to their livelihood. The retail market in the country is dominated by small traders who have been hard hit by the lucrative online business.
The domestic traders have also complained about unfair business practices by foreign companies, and so the move will be a major step for them. Some of these traders are said to have also tried venturing into online platforms in their small capacities.
It is alleged that the e-commerce giants, Amazon and Walmart, have over the years created complex structures that bypass federal rules and regulations. India allows foreign e-commerce players to operate as a place to connect buyers and sellers, but it prohibits them from having inventories of goods and directly selling them on their platforms.
In December 2018, Amazon and Flipkart were severely hit by investment rule changes that prevented foreign e-commerce players from offering products from sellers in which they have an equity stake. This forced Amazon and Flipkart to change their business structures and relations between India and the United States.
According to analysts, the new rules could greatly affect foreign investment in the country, something that would also lead to job losses for its citizens. The analysts have warned that the move will adversely affect the local economy, since some of the major players in the industry have started pulling out their products from their online platforms.
They say that Amazon will be the hardest-hit company if the rules are revised because it indirect equity stake in two of its big online sellers in the country. However, sources revealed that being a major player, Amazon will be considered in the deliberations.
India’s investment promotion agency, Invest India, estimates that the e-commerce retail market will have grown to $200 billion by 2026. In 2019, the retail market was at $30 billion. It is reported that the global pandemic accelerated e-commerce in India because most of the traders opted for online shopping in an effort to curb the spread of the virus.