U.S. urges India not to tighten foreign e-commerce rules

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A U.S. lobby group has urged India not to tighten foreign investment rules for e-commerce companies again.

India is considering revising the rules after traders in the country accused Amazon’s Indian division and Walmart’s Flipkart of creating complex structures to bypass investment regulations.

The U.S. companies deny any wrongdoing.

India only allows foreign e-commerce players to operate as a marketplace to connect buyers and sellers.

Local Indian traders say the U.S. giants promote select sellers and offer deep discounts, which hurts business for smaller local retailers.

In 2018, India changed its foreign direct investment (FDI) rules to deter foreign firms offering products from sellers in which they have an equity stake.

The government is now considering tightening those rules again to include sellers in which a foreign e-commerce firm holds an indirect stake through its parent.

Tightening the rules could hurt Amazon as it holds indirect stakes in two of its biggest online sellers in India, Cloudtail and Appario.

The Indian government is also considering prohibiting online sales by a seller who, for example, purchases goods from an e-commerce entity’s wholesale unit, or any of its group firms, and then sells them on the entity’s websites, Reuters has reported.

The 2018 rule changes soured relations between India and the United States, as Washington said the policy changes favoured local e-commerce retailers over U.S. companies.

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