हिंदी समाचार पढ़े
Expand
O.P. Jindal Global University
 
Home / Corporate Law News / India’s FDI curbs in e-Commerce could hit online sales by $46 Billion by 2022: Study

India’s FDI curbs in e-Commerce could hit online sales by $46 Billion by 2022: Study

January 16, 2019:

Industry sources told the policy would delay or derail some investment plans & push companies such as Amazon & Flipkart to create new, more complex business structures.

e Retail
e Retail

India’s new foreign investment restrictions for its e-commerce sector, which includes giants such as Amazon.com Inc & Walmart-owned Flipkart, could reduce online sales by $46 billion by 2022, according to a draft analysis from global consultants PwC seen by Reuters.

Under the changes, e-commerce firms in India will from Feb. 1 not be able to sell products via companies in which they have an equity interest or push sellers to sell exclusively on their platforms.

Announced in December, just months before a general election due by May this year, the rules were seen as an attempt by Prime Minister Narendra Modi’s government to appease millions of small traders  shopkeepers, who form a key voter base & say their businesses have been threatened by global online retailers.

Industry sources told Reuters the policy would delay or derail some investment plans & push companies such as Amazon  & Flipkart to create new, more complex business structures.

In a private analysis PwC conducted based on estimates provided by the industry & using publicly available information, it forecast that online retail sales growth, tax collections & job creation would be severely hit if companies changed their business models to comply with the new policy.

The draft analysis has not been made public. PwC India, in response to Reuters’ questions, said it “does not endorse any of these assumptions or conclusions, nor have we conducted any independent study on this”.

“As a matter of policy, we do not comment on company specific issues,” PwC said.

The analysis produced by PwC showed that the gross-merchandise value of goods sold online could reduce by $800 million from expectations in the current fiscal year that ends in March, a document seen by Reuters showed. Then, the sales would dip drastically below previous forecasts, lopping off $45.2 billion in the next three years, the data showed.

To be sure, sales would still be growing, but at a less robust rate than envisaged before the policy change.

Online retailers often use gross merchandise value, or GMV, based on monthly online sales as a measurement of performance, as they typically make revenue from the commissions they get from sellers.

The analysis also said that by March 2022 the Indian policy could lead to the creation of 1.1 million fewer jobs than may have been previously expected & lead to a reduction in taxes collected of $6 billion.

Amazon & Flipkart have both sought an extension of the Feb. 1 deadline, but a source at India’s commerce ministry told Reuters the government was unlikely to agree.

Amazon said in a statement it remains “committed to be compliant to all local laws” but has asked the government for a an extension of four months.

Flipkart has sought a six-month extension, a source said. Though the company did not respond to Reuters questions, it told India’s Economic Times newspaper that it believed “an extension is appropriate” to ensure that all elements of the policy were clarified.

Policy setback

The e-commerce investment policy is the latest flashpoint between India & U.S. multinationals. U.S. companies have in the past two years protested against a wide array of regulations – from policies calling on tech companies to store more data locally to those capping prices of imported medical devices.

Morgan Stanley had estimated, before the latest government move, that India’s e-commerce market would grow 30 percent a year to $200 billion in the 10 years up to 2027. With rising use of the Internet & smartphones in India, online retailers have doled out discounts to lure people to shop online for everything from basic groceries to large electronic devices.

The new policy, which followed intense lobbying by groups representing millions of India’s small traders &  shopkeepers, was aimed to prevent such deep discounting by big online retailers.

Trader groups had alleged that online firms used their control over inventory from their affiliates, & through exclusive sales agreements, to create an unfair marketplace that allowed them to sell some products at lower prices. Such arrangements would be barred under the new policy.

A second official at India’s commerce ministry said on Wednesday “there may not be any relaxations” in the policy. “We have already done whatever was required,” the official said.

Big investments

Amazon has committed to investing $5.5 billion in India, while Walmart last year spent $16 billion to acquire Flipkart.

“After one of the biggest foreign investments by Walmart, the government has again blindsided foreign investors,” said Pratibha Jain, a partner at law firm Nishith Desai Associates, which advises e-commerce companies, adding that such policy moves made India “a difficult place to do business”.

India’s commerce minister, Suresh Prabhu, has said the e-commerce policy was “very clear”, though the government was open to hearing views of companies.

“We would like to assure all foreign investors & domestic investors we will have a stable, clear policy,” Prabhu told ET Now news channel last week.

The Confederation of All India Traders on Wednesday said it would fight “tooth & nail” if the government made any changes to the e-commerce policy under pressure from U.S. companies.

“If they want to exit the country they should do it as soon as possible,” said the group’s secretary general, Praveen Khandelwal, adding they planned to hold meetings with the commerce minister to ensure the new policy was not “compromised”.
Source Link

Facebook Comments

 
Related tags :
 

Hindu

...as an eminent lawyer you ought to know that your action tantamount to, under Section B, sub-section G.VIX, read along with I.P.C. (A) XI (B), notwithstanding...                                        TOI

Hindu Cartoon TOI

Hindu

TOI

Auto Driver thrashed for no fault Auto Driver thrashed for no fault,                  source oneindia Demonitisation Diaries Demonitisation Diaries                                                       by sify If India takes One Step, we will take Two by Satish If India takes One Step, we will take Two ...................by Satish Hindu Hindu TOI [caption id="attachment_97474" align="alignleft" width="621"]Donald Trump’s immigration ban Donald Trump’s immigration ban[/caption] Tax Reforms    by Hindu Tax Reforms by Hindu Let Justice Be Let Justice Be

Hindu

TOI

Missing the Point Missing the Point pic by english blog Soaring of Oil Prices pic by indiaone

TOI

pinterest

Hindu TOI

TOI

Hindu Hindu

TOI

[caption id="attachment_97477" align="alignleft" width="621"]UIDAI Leaks UIDAI Leaks[/caption] Belts are for Dogs Belts are for Dogs Lawyers Bearing the Burden Literally Lawyers Bearing the Burden Literally pic by OMG Hindu

TOI

Hindu Hindu

Hindu

America First Walk Your own Talk TOI Hindu [caption id="attachment_97462" align="alignleft" width="524"]Painting India Saffron Painting India Saffron[/caption]

TOI

Delivery Boy Delivery Boy                    by Satish

TOI

Hindu Time to straighten up Time to straighten up                pic by TOI State of Affairs Women Safety: State of Affairs             pic by mangal

Hindu

State of Two Nations State of Two Nations               pic by sandeep

Hindu Hindu

Alligator vs Litigator Alligator vs Litigator

TOI

IBN IBN

ALL_1_Theme_01A_24_2383617g

Hindu

Hindu

State of JudiciaryState of Judiciary by Sandeep Adhwaryu of TOI TOI Acheche DIn Acheche Din     pic by sify Hindu

Hindu

Humour @ Latest Laws Achhey Din Humour @ Latest Laws: Achhey Din Job Hazards Four Pillars of Democracy Four Pillars of Democracy             by Satish Hindu Demonitisation Diaries 1 Demonitisation Diaries 1                                  pic by sify   Demonitisation Diaries 2 Demonitisation Diaries 2  pic by sify [caption id="attachment_97467" align="alignleft" width="621"]Humour with Latest Laws Humour with Latest Laws[/caption] Pic by Hindu Women Empowerment and Sports Women Empowerment and Sports 150425_-_farmers_a_2384764f

Hindu

TOI
 
 
 

Check Also

Navjot Singh Siddhu

Navjot Singh Sidhu sacked from Kapil Sharma Show after his comments on Pulwama attack

February 16, 2019: He is reportedly being replaced by Archana Puran Singh on the show. Punjab Cabinet minister Navjot Singh Sidhu, a member of ‘The Kapil Sharma Show’, has been sacked from the popular television show following his controversial comments ...

Leave a Reply

Your email address will not be published. Required fields are marked *

Latest laws

Join our mailing list to receive the Latest Laws News and updates from our team.