Amazon tells India “not to change” e-commerce foreign investment rules

Leaving no stones unturned in its legal battle against the Future Group, Amazon has asked the Indian government “not to change” e-commerce foreign investment rules until investigations into its business practices had been concluded.

According to Reuters, New Delhi has been considering revising e-commerce foreign investment rules for weeks. In 2018, the amendments to the rules forced Amazon and Flipkart to rework their business structures and soured trade relations between India and the United States.

The report states that the commerce ministry met e-commerce players after allegations by retailers that Amazon and Walmart’s Flipkart create complex structures to bypass federal foreign investment rules and damage small traders. However, both companies have denied any wrongdoing and have reiterated that they are helping small businesses in India.

According to two sources, an Amazon executive told the commerce ministry officials that the Competition Commission of India (CCI) and the Enforcement Directorate were probing the allegations and it would be premature to make any policy change until those proceedings have concluded. Amazon said any policy change which impacts current investments would dent global investor confidence and sentiment, and any disruption caused, have a devastating consequence on suppliers and small businesses.

India only allows foreign e-commerce players to operate as a marketplace to connect buyers and sellers; it prohibits them from holding inventories of goods and directly selling them on their platforms. In January this year, reports stated that the government is considering adjusting some provisions to prevent those arrangements, even if the e-commerce firm holds an indirect stake in a seller through its parent. As such, Yogesh Baweja, the spokesman for the ministry of commerce and industry, had said that any changes would be announced through a so-called press note, which contains foreign direct investment rules.

Also Read: India’s new foreign policy to dictate diverse aspects of foreign trade

Moreover, Invest India estimates that India’s e-commerce retail market is headed for a growth of $200 billion a year by 2026. But domestic traders, as per TOI, have been unhappy with the growth. They see foreign e-commerce businesses as a threat to their livelihoods and accuse them of unfair business practices that use steep discounts to target rapid growth.