Author: Vindu Goel / Source: New York Times
Prime Minister Narendra Modi’s administration has turned protectionist. Protesters demonstrated in New Delhi this year when the American retailer Walmart bought a majority stake in the Indian e-commerce retailer Flipkart. Saumya Khandelwal/Reuters
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.
Representatives for Amazon and Flipkart in India declined to comment on the new rules, saying the companies were still assessing them. The government posted the changes, which go into effect Feb. 1, without warning on Wednesday evening in New Delhi, while much of the business world in both countries was on vacation.
“Ultimately, the customer is going to suffer because Indian sellers are not at the scale where they can provide a good experience to customers,” said Satish Meena, a senior forecaster in New Delhi for Forrester, a global technology research firm. “This is a very regressive strategy by the government.”
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…
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