The Indian government is playing the role of festive party pooper for
Walmart and Amazon after it announced new regulations that look set to impede the U.S. duo’s efforts to grow their businesses in India.
Online commerce in the country is tipped to surpass $100 billion per year by 2022 up from $35 billion today as more Indians come online,
according to a report co-authored by PwC. But 2019 could be a very different year after
an update to the country’s policy for foreign direct investment (FDI) appeared to end the practice of discounts, exclusive sales and more.
The three main takeaways from the new policy, which will go live on February 1, are a ban on exclusive sales, the outlawing of retailers selling products on platforms they count as investors, and restrictions on discounts and cashback.
Those first two clauses are pretty clear and will have a significant impact on
Amazon — which has pumped some $5 billion into India — and Walmart, which
forked out $16 billion to buy India-based Flipkart.
Both online retailers have been able to make a splash by tying up with brands for exclusive online sales, particularly in the smartphone space where, for example, Amazon has worked with
Xiaomi and
Flipkart has collaborated with Oppo. The new guideline would appear to end that practice, while adding further restrictions to complicate relationships with vendors. From February, brands will be forbidden from selling more than 25 percent of their sales via any single e-commerce marketplace.
Walmart bought Flipkart for $16 billion, but already both founders of the Indian company have left [Photo by AFP/Getty Images]
