India considering tweaking clause on equity - sources India government spokesman says policy change being considered Past changes have hit Amazon, Walmart
NEW DELHI, Jan 19 (Reuters) - India is considering revising its foreign investment rules for e-commerce, three sources and a government spokesman told Reuters, a move that could compel players, including Amazon.com Inc, to restructure their ties with some major sellers.
The government discussions coincide with a growing number of complaints from India’s brick-and-mortar retailers, which have for years accused Amazon and Walmart Inc-controlled Flipkart of creating complex structures to bypass federal rules, allegations the U.S. companies deny.
India is considering revising its rules for foreign direct investment in e-commerce, reportedly to prevent e-commerce marketplaces from having an indirect stake through their parent companies in the seller entities which sell products on the marketplaces. Reuters first reported this on Tuesday. The changes will come in through a press note as the last restrictions in 2018 did a spokesman from the Ministry of Commerce & Industry told the publication.
Who will this impact?
as it holds an indirect equity stake in two of its biggest online sellers.
India only permits foreign companies to invest in marketplace-based e-commerce operations; e-commerce companies owning inventory are not permitted to have foreign investments. India’s latest Press Note 2, 2018 had attempted to address exactly this: to reign in how much marketplace can influence sale of products to their own benefit. The Press Note placed further restrictions on FDI in e-commerce:
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‘The logistics team in the Commerce Ministry is trying to work towards integrating the various means of transport, documentation and stakeholders’ The National Logistics Policy, now under consultation, together with the National Logistics Council and State Logistics Coordination Committee, will work as a template for better coordination and integrated development of logistics centre, Commerce and Industry Minister Piyush Goyal has said.
“The logistics team in the Ministry of Commerce & Industry is trying to work towards integrating the various means of transport, documentation and stakeholders, including customs, ports, shipping companies, railways, trucking companies, inland waterways.through technology platforms,” the Minister said addressing the first National Conference of States on Logistics on Tuesday. This would result in a much-simplified way of working, which will enhance the ease of doing business.
Walmart and Flipkart did not immediately respond to a request for comment.
Yogesh Baweja, the spokesman for the Ministry of Commerce & Industry, which is working on the issue, confirmed to Reuters any changes will be announced through a so-called press note, which contains foreign direct investment rules. He did not give details. It s a work in progress, Baweja said, adding an internal meeting on the subject last took place about a month ago. Of course Amazon s a big player so whatever advice, whatever suggestions, whatever recommendations they make, they are also given due consideration.
Frayed ties
The 2018 rules forced Amazon and Flipkart to rework their business structures and soured relations between India and the United States, as Washington said the policy change favoured local e-tailers over US ones.
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