US pushes India for fair e-commerce rules for Amazon, Walmart
What's the story
Ahead of trade talks, the United States has urged India to allow foreign-owned e-commerce companies like Amazon and Flipkart to hold and sell their own inventory. The proposal, if accepted, could significantly change India's online retail landscape. Currently, Indian law prohibits foreign-funded platforms from operating inventory-based models and mandates them to source goods from third-party vendors.
Policy disparity
Uneven playing field
Unlike foreign-owned platforms, domestic players such as Ajio, BigBasket, and Nykaa are allowed to stock and sell their own products. The US believes this policy creates an uneven playing field between foreign and local e-commerce firms. The push for inventory-based operations comes along with calls for greater transparency in digital trade, cloud services, and logistics from Washington.
Pilot project
Pilot project for inventory-based exports
India is said to be considering a pilot project for inventory-based exports, which would let foreign e-commerce firms hold stock for overseas buyers without violating domestic marketplace-only rules. The new framework's export hubs aim to ease logistics, GST refunds, and interstate movement for small exporters. Even though US-India trade talks are temporarily stalled due to Washington's government shutdown, negotiations are expected to resume with a bilateral trade agreement (BTA) targeted for conclusion in November.
Trade concerns
Concerns from Indian trade bodies
Trade bodies like the Confederation of All India Traders (CAIT) have raised concerns that allowing foreign-owned platforms to hold inventory could hurt small retailers and violate India's FDI policy. The current restriction, enforced through Press Note 3 (2016), aims to prevent market manipulation and protect domestic competition. Despite these concerns, India is still weighing the US's proposals as it finalizes its comprehensive e-commerce policy.