NEW DELHI (INDIA) – A lobby group in the US representing companies such as Amazon.com and Walmart has urged India not to tighten foreign investment regulations for eCommerce firms again.
India is considering revising the rules after traders in the country accused Amazon’s Indian division and Walmart’s Flipkart of creating complex structures to bypass investment regulations.
The US companies deny any wrongdoing.
India only allows foreign e-commerce players to operate as a marketplace to connect buyers and sellers but local traders say the US giants promote select sellers and offer deep discounts, which hurts business for smaller local retailers.
In 2018, India changed its foreign direct investment (FDI) rules to deter foreign firms offering products from sellers in which they have an equity stake.
The government is now considering tightening those rules again to include sellers in which a foreign e-commerce firm holds an indirect stake through its parent.
Such a change could hurt Amazon as it holds indirect stakes in two of its biggest online sellers in India, Cloudtail and Appario.
The US-India Business Council (USIBC), part of the US Chamber of Commerce, urged the Indian government not to make any more material restrictive changes to e-commerce investment rules.
“Any further changes in FDI rules would limit e-commerce firms from leveraging their scale,” USIBC said.
USIBC also asked India’s Department for Promotion of Industry and Internal Trade (DPIIT) to engage in substantive consultation with companies on e-commerce regulation.