By Aditya Kalra
NEW DELHI, July 23 (Reuters) – India’s government on Thursday eased foreign investment rules to allow e-commerce companies to buy products directly from Indian sellers and then sell them to overseas customers, a major win for Amazon, which lobbied for the change for months.
The relaxation comes just when India and the United States are struggling to sign a trade agreement. India’s e-commerce investment rules that Amazon and Walmart face have for years been a sore point between New Delhi and Washington.
The move marks a rare relaxation of India’s tightly controlled e-commerce regime, which has long barred foreign online retailers from buying and selling goods directly. Amazon and Walmart have argued the restrictions limit their ability to expand, while retailer groups warn any easing could give foreign firms an unfair advantage.
Seeking to protect millions of small retailers, India only allowed foreign e-commerce firms to operate as online marketplaces that connect buyers and sellers. The government said the change was aimed at boosting exports.
The decision would “facilitate greater exports through easier and increased access of global markets,” it said in a statement.
Amazon told Reuters in a statement the policy change would help manufacturers in smaller towns and cities reach overseas buyers and support its goal of achieving $80 billion cumulative exports from India by 2030.
Walmart’s e-commerce company in India, Flipkart, did not respond to Reuters queries.
CALL FOR STRICT OVERSIGHT
The relaxation comes despite industry groups backing small retailers opposing any easing of restrictions for the U.S. companies in closed-door meetings held with the government last year.
The Confederation of All India Traders (CAIT), which represents millions of brick-and-mortar retailers, has argued the change could be abused by foreign companies and give them more control over supply chains.
In 2024, the Indian antitrust watchdog’s investigation found that Amazon and Flipkart breached competition laws by giving preference to select sellers on their shopping websites, allegations the companies deny.
“A robust monitoring mechanism must be put in place to ensure there is no misuse of this provision. Given the past track record of several large tech companies … strict oversight is essential,” Praveen Khandelwal, Secretary General of CAIT, told Reuters.
Amazon and Flipkart are dominant players in India’s e-commerce market which is set to be worth $250 billion by 2030, according to a Google and Deloitte report in April, from current levels of roughly $90 billion.
(Reporting by Aditya Kalra; Editing by Kirsten Donovan, Andrea Ricci and Sanjeev Miglani)
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