India has significant restrictions on foreign goods entering its consumer markets, and now it has ruled that Amazon and Walmart cannot buy Indian sellers to use as a pass thru for its products:
The Indian government dealt a surprise blow on Wednesday to the e-commerce ambitions of Amazon and Walmart, effectively barring the American companies from selling products supplied by affiliated companies on their Indian shopping sites and from offering their customers special discounts or exclusive products.
If strictly interpreted, the new policies could force significant changes in the India strategies of the retail giants. Amazon might have to stop competing with independent sellers and end its offerings of proprietary products like its Echo smart speakers in India, its top emerging market.
For Walmart, which spent $16 billion this year to buy 77 percent of Flipkart, India’s leading online retailer, the new rules could hamper its strategy of selling clothing and other products under its own private brands and prevent it from using its supply-chain expertise and clout with retailers to drive down prices for Indian consumers.
Or drive wages down, and local vendors and manufacturers out out of business.
And then they use their monopsony power over the labor market to turn their workplaces into freakish hellscapes.
It’s just what they do.
Prime Minister Narendra Modi of India initially courted foreign companies to invest more in the country after his 2014 election victory, but his administration has turned protectionist as his party’s re-election prospects have dimmed in recent months. Mr. Modi has increasingly sought to bolster Indian firms and curb foreign ones through new policies, including one that requires foreign companies like Visa, Mastercard and American Express to store all data about Indians on computers inside the country. The government has also declared its intention to impose tough new rules on the technology industry.
The new e-commerce rules seemed to be an attempt by Mr. Modi to placate small traders, who have been hurt by his tax and financial policies, ahead of national elections next May, analysts said. The changes would also help Paytm, a local payments company that operates a digital mall, and Reliance Industries, an Indian conglomerate with online retail ambitions that is controlled by Mukesh Ambani, India’s richest man and a political patron of Mr. Modi.
Under Indian law, foreign-owned retailers were already barred from selling any products directly on their own e-commerce sites. In response, Amazon and Flipkart, which has long had foreign investors, set up partially owned affiliated companies to sell products like groceries, electronics and books on their sites. The arrangements gave them more control over customer service and allowed them to sell some products at prices below those offered by independent sellers.
The new policies appear to close that loophole. They also prevent the online platforms from striking deals to sell products exclusively, which they frequently do now for hot items like new phone models.
Modi is a religious bigot and a a fascist.
Amazon and Walmart are Amazon and Walmart.
My hope is not that one or the other wins, but that somehow, both sides lose.