Amazon wants India to ammend retailing laws to enter the $450 bn retail market
Hoping to get a foot into the door which opens to the $450 billion Indian retail market, America’s largest online retailer Amazon has sent one of its top executives to meet with ministers in New Delhi.
On Tuesday, Amazon’s global Vice President Paul Misener met India’s trade minister Anand Sharma and discussed the creation of a favorable policy environment for Amazon to do business in India, which is otherwise not allowed in the country.
Misener discussed the possibility of changes to the policy, which currently does not allow them to do business in India, reports The Wall Street Journal. After intense debates in September, the Indian government had paved way for foreign investor’s to own more than 51% in multi brand retail companies in India. However, the government later said that the new policy does not allow e-commerce ventures with foreign direct investment to operate multi-brand retailing websites in the country.
The Wall Street Journal’s report quoted an unnamed official saying “We will consider the requests, but it has to be a political decision”.
In India, the government has given states the power to allow or reject a foreign owned multi brand from operating in their respective states. When it comes to e-commerce, it becomes difficult to enforce, unless the states give explicit consent. State taxes also vary from Central taxes.
Though Amazon began testing the waters in India in February 2012 with the launch of its price-comparison platform Junglee, it does not buy or sell goods in India yet. Junglee is more of a marketplace where merchants list their products and users searching for items are directed to the merchant site to complete the purchase.
Fledgeling e-commerce industry in India, estimated to be worth $10 billion, has been hurt by the lack of clarity on the policy front. Flipkart, the poster boy of Indian e-commerce, recently had to divest its Indian operations to Indian investors so as to get around the FDI regulations. The front end operations of the company, which retails products in India, was sold to Indian investors and a licensing agreement with a Singapore entity owned by Flipkart and its foreign investors was put in place.
Over the last few months, the industry has been buzzing with news of a possible launch by Amazon in India. This move brings it one step closer to the launch. We’ve been hearing that the company has all the infrastructure ready and its only a matter of getting over the policy hurdle before it launches in the country.
What are your thoughts?