U.S. lobby group views India's e-commerce plan as worrying, email shows

Altex Industries

24/06/2021 08:57

By Aditya Kalra and Abhirup Roy
    NEW DELHI, June 24 (Reuters) - A top lobby group that is
part of the U.S. Chamber of Commerce believes India's proposed
new e-commerce rules are a cause for concern and will lead to a
stringent operating environment for companies, according to an
email reviewed by Reuters.
    India this week spooked online retailers like Amazon
 AMZN.O  and Walmart's  WMT.N  Flipkart by outlining plans to
limit "flash sales", reining in a private label push and
mandating them to have a system to address grievances.
 urn:newsml:reuters.com:*:nL2N2O31ST
    The Washington-headquartered U.S.-India Business Council
(USIBC), of which Amazon and Walmart are members, described the
rules as concerning in an internal email, saying some provisions
were in line with New Delhi's stance on other big digital
companies.
    India's draft plan "includes several concerning policies,
including significant limits on platforms' ability to organise
sales and handle grievances," USIBC said in an email to its
members.
    USIBC has in the past urged India not to tighten a separate
set of rules governing foreign investment https://www.reuters.com/business/retail-consumer/exclusive-us-lobby-group-urges-india-not-tighten-foreign-e-commerce-rules-2021-01-30
 in companies like Amazon and Flipkart, an issue that has often
soured trade relations between India and United States.
    USIBC did not immediately respond to a request for comment.
    The new rules - open for consultation until July 6 - are
expected to have an impact across the board in an online retail
market forecast to be worth $200 billion by 2026.
    They will also apply to Indian firms like Tata's BigBasket
and Reliance Industries'  RELI.NS  JioMart, but the proposal
comes after Indian retailers for years complained that market
leaders Amazon and Flipkart used complex business structures to
bypass India's foreign investment law, hurting small businesses.
    The companies deny any wrongdoing.
    India's new proposed rules have raised concerns they will
force Amazon and Flipkart to review their business structures,
industry sources and lawyers have told Reuters.  urn:newsml:reuters.com:*:nL2N2O41TY  
    The USIBC email noted that India's proposals "preclude
(e-commerce) platforms from owning vendors". 
    Amazon specifically holds an indirect stake in two of its
top sellers and a Reuters investigation https://www.reuters.com/investigates/special-report/amazon-india-operation
 in February cited Amazon documents that showed it gave
preferential treatment to a small number of its sellers.
    India's rules also will force e-commerce companies to reveal
the country of origin of a product and suggest alternatives to
ensure a "fair opportunity for domestic goods".
    Some of the new provisions align with India's similar
federal policies "for social and digital media companies ... and
will result in a more stringent e-commerce regime," USIBC said
in its email.

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ANALYSIS-India e-commerce rules cast cloud over Amazon, Walmart
and local rivals     urn:newsml:reuters.com:*:nL2N2O41TY
FACTBOX-India's new e-commerce rules that could jolt foreign,
local players     urn:newsml:reuters.com:*:nL3N2O41NH
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 (Reporting by Aditya Kalra in New Delhi; Editing by Kenneth
Maxwell)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))