Arch rivals, Amazon and Walmart, have joined hands to lobby the Indian government on the new foreign direct investment (FDI) rules, which are apparently giving them sleepless nights.
The retailers believe that the new rules will dampen their expansion plans in India. The biggies are thus urging the government to extend the February 1 deadline to comply the changes in the new FDI rules, according to sources with knowledge of the matter.
Sources also confirmed that the new FDI rules are expected to huddle the existing e-commerce ecosystem. Companies such as Amazon and Walmart’s Flipkart have already invested billions of dollars in India and need more time to study the changes in detail.
Walmart invested US $ 16 billion last year to acquire Flipkart Online Services, and Amazon has invested in offline retailers like Shopper’s Stop and is reportedly discussing investing in Future Retail.
The Centre released the press note on FDI in the retail sector on December 26, 2018. The release, which was expected to provide clarity on FDI in e-commerce, has invited a huge discussion and criticism in the media and business circle.
The sources believe that some of the few clauses need major changes. Initially, no vendor will have equity participation by its group firm or the marketplace, and also, a vendor’s stocks are suppose to be controlled by the marketplace if more than 25% of the vendor’s purchases are from the marketplace, including its wholesale unit. Hence, its group firm or the marketplace entity cannot have the control over stocks, under the new FDI rules.
