Govt assures CAIT of strict foreign investment rules for e-commerce

An India trading group comprising of millions of brick-and-mortar retailers has received assurances from the government that stringent changes will be made to foreign investment rules for e-commerce. This is a move that could hit Amazon.com Inc.

It was exclusively reported this week that India was considering revising the policy after complaints from traders who accuse Amazon and Walmart Inc's Flipkart of creating complex structures to bypass investment rules. The U.S. companies however deny any wrongdoing.

The Confederation of All India Traders (CAIT) said in a statement that its delegation held a meeting with Commerce Minister Piyush Goyal who told them that a strenuous exercise was underway to issue new foreign investment rules.

"Mr. Goyal told us the government will address concerns about alleged violations of current rules. The new rules will be issued shortly," Praveen Khandelwal, secretary general of CAIT said. CAIT says it represents 80 million retail stores in India. However India's ministry of commerce did not immediately respond to a request for comment on CAIT's statement.

India's e-commerce retail market will grow at $200 billion a year by 2026 from $30 billion in 2019, according to estimates by investment promotion agency Invest India.

Unhappy domestic traders say foreign e-commerce businesses indulge in unfair business practices that use steep discounts to target rapid growth, allegations the companies deny.

Amazon and Flipkart were last hit in Dec. 2018 by investment rule changes that barred foreign e-commerce players from offering products from sellers in which they have an equity stake.