Walmart and Amazon have been lobbying hard with the US government to make Indian counterpart soft on Press Note 2. According to a letter cited by a Reuters report, Walmart termed new FDI rule as backward and can be a roadblock for trade relations.
Walmart had requested the United States Trade Representative (USTR) to ask the Indian government to extend the deadline by six months. Acting on the company’s complaint, the US trade policymakers flag the concerns on new e-commerce rules with the Indian counterpart.
Nevertheless, the Indian government didn’t blink to USTR concerns and implemented the FDI rule in February this year. Walmart’s attempt to gain flexibility via lobbying went into vein.
Letter written to USTR by Walmart on January 7 is also in possession of Entrackr.
“Press note 2 would have major implications for all major US firms in the sector. There was no consultation with affected companies in the e-commerce sector regarding the policy in advance of it’s December 26th release. It came as a total surprise. This is in contrast to a longer more consultative process that lasted 2 years in advance of the opening of the eCommerce marketplace model to foreign investment in 2016,” mentioned the letter.
Ever since the letter was written to USTR by Flipkart-owner, new e-commerce rule has been a major contention between the two countries. According to Entrackr’s sources inside DPIIT, the letter has been irking government and its agencies.
“Press Note 2 isn’t a new thing. It has been there for about three years. The government feels Walmart and Amazon are going out in the US and bad-mouthing the Indian government,” said a top government official on the condition of anonymity.
According to him, the lobbying meant to plug the violations these two companies were doing to the original FDI policy.
The Walmart letter to USTR highlighted that the new e-commerce rule is a major change and regressive policy shift as it doesn’t allow purchase more than 25% of inventory by a foreign-funded marketplace. It also forbids any exclusive agreement with sellers.
“The purported rationale of such regulations is to protect small retail players who seem to be threatened by the growth of larger retail and e-commerce companies. The argument is that they can’t compete with discounted prices that large international firms offer, and will be driven out of business. This argument doesn’t account for why there should be differentiated treatment between large foreign e-commerce companies, and large domestic companies,” mentioned the letter.
Meanwhile, India’s Commerce Minister Piyush Goyal emphasised time and again that the government is firm on its decision on new e-commerce rule. Since USTR and Indian trade officials are meeting on Friday, FDI in e-commerce is expected to be a major topic of discussion.