Daily Management Review

India E-Commerce Rules Regressive, Wallamrt Had Warned US Government In January: Reuters


India E-Commerce Rules Regressive, Wallamrt Had Warned US Government In January: Reuters
Days before the United States and India is set to start discussions on trade in New Delhi, the US government has been privately informed by Walmart – the largest retailer of the world, that the new investment rules for e-commerce in India were regressive and could impact the trade ties between the two countries, claimed a report published by the global news agency Reuters.
According to Reuters, a document seen by it showed the level of concern at Walmart about the new rules in India even as the retailer said that there was no outcome from lobbying efforts and the new regulations were implemented from February 1 this year. The new regulations on e-commerce have become a major thorn in the trade relations between India and the US in recent times.
“It came as a total surprise ... this is a major change and a regressive policy shift,” Walmart’s Senior Director for Global Government Affairs Sarah Thorn told the Office of the United States Trade Representative (USTR) in an e-mail on January 7, reported Reuters.
Just a few months before the e-mail, Walmart had spent $16 to acquire Indian e-commerce giant Flipkart – which is the largest takeover deal ever for the retailer globally.
Regular inputs are provided by it to the US and Indian government on policy issues and this was a “past issue and Walmart and Flipkart are looking ahead”, said Walmart to Reuters in a statement on the issue.
There were no comments available from the USTR.
It wanted the Indian government to delay imposing the rules by six months, Walmart told USTR in the letter. However that did not happen. The matter was spoken to about by Washington and New Delhi. But a non-committal response at that time was given by India. 
Walmart has been trying to restructure its international business to increase growth further and increase sale through its online channel and the problems that it is facing in India underscores the regulatory challenges for it in that path. The company’s proposed acquisition of delivery app Cornershiop was blocked by Mexico’s competition regulator recently while the merger of its British subsidiary Asda with rival Sainsbury’s was blocked in Britain.
But Walmart investors apparently have remained unfazed by those events. So far this year, there has been a 21 per cent rise in its shares against a 19 per cent rise for the S&P 500.
India’s new policy wasn’t good for global businesses, said Walmart in its January letter to the USTR. The company also highlighted there would be “significant” tax revenues for New Delhi because of the growth of Flipkart driven by the foreign direct investment that would be made in te Indian company by Walmart, the company had added.
“Changing rules to hinder international business following major investments ... will have important implications for India FDI goals and add unnecessary pressure to trade discussions,” Walmart said in its note.
Under the new e-commerce regulations New Delhi had banned companies from using companies in which e-commerce players have a equity for selling products on their platforms. It also barred companies from making exclusive selling deals with sellers for their platforms.
In February, thousands of products from its India website were removed for a brief period by Amazon.com Inc for the time it needed ot comply with the changed regulations. And according to reports, some of its vendor relationships were forced to be reworked by Flipkart.