India has told foreign e-commerce firms such as Amazon and Walmart’s Flipkart that they must ensure compliance with new foreign investment rules aimed at deterring them from providing steep online discounts, three sources familiar with the discussions told Reuters.
The comments were made by Goyal during a closed-door meeting on Monday with several e-commerce companies. It comes in a week when US Secretary of State, Mike Pompeo, is due to visit New Delhi, and trade tensions have heightened between the two countries.
India from Feb 1 imposed new e-commerce FDI rules to help hundreds of thousands of small traders, but small businesses and a right-wing group close to Prime Minister Narendra Modi’s ruling party say there are still issues. They allege big online retailers use complex business structures to circumvent federal rules, and still burn billions of dollars to offer discounts.
Amazon and Flipkart say they’ve complied with the rules and deny any wrongdoing. Both companies, and the US government, protested against the rules in January, saying they would force firms to change their business structures, Reuters has reported.
Goyal during the Monday meeting defended the Centre’s new FDI policy, saying the rules should in no way be violated by any firm, both in letter and in spirit. The Centre will not allow e-commerce firms’ discounting practices to affect small shopkeepers, Goyal said, according to three industry executives in attendance.
“The minister was clear and direct,” said one of the executives. Flipkart CEO Kalyan Krishnamurthy said the company looked forward to working with the government and Goyal had engaged “in a candid, positive and progressive” discussion.
Amazon said it welcomed the “open and candid discussions and the promise of continuing engagement” with the government, adding it was committed to supporting various Indian government initiatives.