India's new investment rules for e-commerce regressive, could hurt trade: Walmart to US government

Amid expansion of business in India, Walmart has told the US government privately in January that India's new investment rules for e-commerce were regressive and had the potential to hurt trade ties.

According to Reuters, Walmart had invested USD 16 billion in e-commerce giant Flipkart, its biggest ever acquisition globally. In a statement to Reuters on Thursday, Walmart said it regularly offers input to the US and Indian governments on policy issues and this was a "past issue and Walmart and Flipkart are looking ahead". In the January letter to the United States Trade Representative (USTR), Walmart said it wanted a six-month delay in the implementation of the rules, but that did not happen. Washington did raise concerns about the policy with New Delhi, but the government gave a non-committal response, a trade ministry official told Reuters.

Walmart's problems in India highlight the regulatory complications it faces as it restructures its international business to boost growth and online sales. E-commerce is likely to again be on the agenda on Friday when a USTR delegation meets Indian trade officials in New Delhi. Walmart told Reuters "Changing rules to hinder international business following major investments ... will have important implications for India FDI goals and add unnecessary pressure to trade discussions."

The new rules barred companies from selling products via firms in which they have an equity interest and also from making deals with sellers to sell exclusively on their platforms. "The action appears in every respect ... intended to placate Indian companies and local traders," Walmart told the USTR.

On July 11, Walmart International President and CEO Judith McKenna met Commerce and Industry Minister Piyush Goyal to discuss local sourcing norms for the domestic market. "Minister @PiyushGoyal met president & CEO of Walmart International, Judith McKenna and discussed local sourcing and boosting sales of 'Made in India' products, which will benefit local businesses and the overall domestic market," a tweet by the minister's office has said on Wednesday.

In a blunt message - for the second time in a month -- to the Indian government, Ross said that the recent decisions that have impacted American companies like Amazon and Walmart have created an atmosphere of unpredictability and has hit the confidence of other companies to invest in India. He was referring to India's FDI rules in e-commerce. Ross said that a recognition by India that some of the tariff rules, regulations, and protectionist policies "are actually hurting" their companies on an international basis would be useful. He exuded confidence that Prime Minister Narendra Modi would take necessary steps to remove obstacles that constrain businesses and the manufacturing sector.

The Modi Government is in position better than they have been earlier to do something and also the prime minister is determined to improve the economy, he said. According to the Commerce Secretary, the Prime Minister, in his second term, will address the issue of high tariffs, carry out the reforms in particular in the labour sector and other kind of protectionist rules that were designed to help Indian industry, but they are actually counterproductive because they make it relatively harder for large businesses to function.

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