India's planned revision of foreign investment rule to hit Amazon, Walmart

India may revise its rule to prohibit foreign e-commerce companies like Amazon and Walmart-controlled Flipkart from offering goods from sellers from where they have an indirect stake.

The revision could compel players to restructure their ties with some major sellers where they have indirect stakes through parent companies.

Amazon holds indirect equity stakes in two of its largest Indian online sellers.

Foreign e-commerce players in India could only operate as a marketplace to connect buyers and sellers and are prohibited from holding inventories of goods and directly selling them on their platforms.

Last Dec. 2018, Amazon and Walmart’s Flipkart were impacted by investment rule changes that prohibited foreign e-commerce companies from offering products from sellers from where they have an equity stake.

Yogesh Baweja, the spokesman for the Ministry of Commerce & Industry, which is working on the issue, said the plan is a work in progress.

He added that they give due consideration to whatever recommendations is made by Amazon, being a big player.

India’s e-commerce retail market is expected to grow from $30 billion in 2019 to $200 billion a year by 2026.

Brick-and-mortar retailers in India see foreign e-commerce businesses as a threat to their livelihoods and accuse them of unfair business practices that use steep discounts to target rapid growth.

India's-commerce growth accelerated last year when the pandemic drove more shoppers online.