NEW DELHI :India’s government has drafted a proposal to ease foreign investment rules to allow e-commerce companies such as Amazon to buy products directly from Indian sellers and then sell them to overseas customers, a document showed.
India prohibits foreign e-commerce companies from selling goods directly to consumers at home or abroad, allowing them only to operate a marketplace to connect buyers and sellers for a fee.
The policy has been a matter of dispute between New Delhi and Washington for years, and Amazon has lobbied the Indian government to ease the rules for exports, Reuters has reported.
The proposed changes coincide with efforts by India and the U.S. to overcome their differences over a long-delayed trade deal.
INDIA’S SMALL RETAILERS DISAGREE
The proposals also rebuff the demand of groups backing millions of small Indian brick-and-mortar retailers that the government should dismiss Amazon’s request on the grounds the U.S. company’s financial strength is a threat to their businesses.
Less than 10 per cent of small Indian businesses selling online domestically participate in global e-commerce exports, “constrained by complex documentation, compliance requirements,” said a 10-page proposal from The Directorate General of Foreign Trade, which is not public but was seen by Reuters on Thursday.
“The proposal envisages a third-party export facilitation model, wherein a dedicated export entity linked to e-commerce platforms would manage compliance.”
The directorate and Amazon did not respond to Reuters’ queries. The proposal will require a sign-off from India’s cabinet.
Reuters has reported Amazon said the move will help Indian exporters, but the Confederation of All India Traders, which represents millions of bricks-and-mortar retailers, opposed the proposal on Friday. It said it could be abused by foreign companies and give them more control over supply chains.
“It will create a slippery slope, making it nearly impossible to monitor whether goods are genuinely meant for exports or being diverted into the domestic market,” said B C Bhartia, the confederation’s national president.
The directorate’s draft said the relaxed rules would only apply to exports, and any breaches of the policy would attract stiff penalties along with criminal action. It has proposed implementing the model on a pilot basis, and scaling it up after a review.
Amazon said in December it helped to generate $13 billion in cumulative exports for sellers from India since 2015, and plans to increase that to $80 billion by 2030.
Last year, the Indian antitrust watchdog’s investigation found that Amazon breached competition laws by engaging in deep discounting and working with its preferred sellers, allegations Amazon denies.
