New rules for foreign-owned ecommerce cause headaches for Amazon and Walmart in India

Strict new rules for foreign-owned ecommerce companies are set to cause fresh headaches for Amazon and Walmart in India, even after they have invested billions of dollars to develop local businesses. The rules, which take effect in February, will prohibit foreign companies that run ecommerce marketplaces, such as Walmart-owned Flipkart and Amazon’s Indian site, from selling goods sold by businesses in which they hold equity. They also prohibit ecommerce platforms from “directly or indirectly influencing the price of goods and services” — a condition that could put an end to the promotions that have helped drive growth and become national events. The rules are intended to appease India’s multitude of small businesses, an important electoral constituency, which has long complained that the platforms give preferential treatment to their partners. They argue that this has created unfair competition and made it difficult for them to challenge large, deep-pocketed ecommerce rivals… Walmart spent $16 billion to buy Flipkart, the Indian group founded by two former Amazon employees in 2007. Amazon has been operating in India since 2012 and has committed an estimated $7 billion to building its operations in the country.

Amy Kazmin