India’s E-Commerce Policy: Finding Common Ground with Global Partners

Image Source: The Economic Times

India is coming under increasing tariff and diplomatic pressure to open its market fully to international e-commerce behemoths Amazon and Flipkart, which is owned by Walmart, despite growing domestic criticism and regulatory barriers. The pressure comes during an ongoing trade dialogue and as India attempts to find a balance between foreign investment and the interests of its huge chain of small merchants.

Key Highlights:

The US and other trade partners are also calling on India to ease e-commerce curbs and grant more freedom to operate to Amazon and Flipkart, contending that existing regulations such as caps on inventory control, exclusive tie-ups, and deep discounting curtail competition and limit consumer choice.
Indian regulators, though, are stepping up the vigilance. The Competition Commission of India (CCI) has held both Amazon and Flipkart in violation of anti-competitive behavior, such as favoring some sellers, deep discounting, and exclusive product launches, that harmed small retailers and warped the market.
The Enforcement Directorate (ED) has also conducted raids on several sellers associated with both platforms, investigating breaches of foreign direct investment (FDI) regulations that mandate e-commerce marketplaces to remain neutral platforms and not dictate prices or stock.
Local trader associations, spearheaded by the Confederation of All India Traders (CAIT), have organized nationwide protests calling for prosecution of Amazon and Flipkart for allegedly sabotaging small businesses and breaching competition laws.

To regulatory discoveries, authorities could shortly impose increased transparency of algorithms, ban exclusive contracts, and require equal marketplace access to all sellers. New regulations on e-commerce might also tighten data privacy and add anti-monopoly protections.

Under these strains, Flipkart has revealed plans to relocate its holding company from Singapore to India, conforming to local customs and indicating its long-term intent in the Indian market.

Source: Business Today, Economic Times, Times of India, Khurana & Khurana, Upstox