Amazon, Walmart Lobby for E-Commerce FDI in India

April 28, 2014 Posted by India Briefing Reading Time: 4 minutes

MUMBAI – According to its latest lobbying disclosure report filed with the U.S. Senate, Amazon.com Inc. and its group entity Amazon Corporate LLC lobbied for “foreign direct investment in India” among other issues last quarter.

The disclosure by Amazon comes shortly after the release of a discussion paper on business-to-consumer (B2C) e-commerce FDI earlier this year.

While Amazon and its group entities have openly discussed engaging with the Indian government on the relaxation of FDI in e-commerce, this is the first time the firm has included the issue in a U.S. lobbying disclosure report.

Among others, Amazon reportedly lobbied with the U.S. Trade Representative, U.S. Department of Commerce, U.S. Department of State and U.S. House of Representatives in 2013 with a total expenditure of US$3.45 million.

Amazon’s foray into U.S.-based lobbying on Indian FDI follows a similar disclosure by Walmart in 2012 that triggered a probe into Walmart’s lobbying activities by the then-Congress-led Indian government. While Walmart did not admit to lobbying on any India-specific issues last quarter, the vague descriptor “discussions regarding investments overseas” was listed among the firm’s lobbying activities.

While India permits 100 percent foreign direct investment (FDI) in business-to-business (B2B) e-commerce, FDI in B2C e-commerce remains strictly prohibited and bound by FDI restrictions on the retail sector more generally. Because of this, many foreign e-retailers, such as Amazon and eBay, have established a “marketplace model,” whereby local independent merchants sell goods directly to consumers and the platform earns commission from those merchants.

Since launching its marketplace platform in India last June, Amazon India has expanded its product line from books and video content to toys, music and now clothing, apparel, shoes and accessories.

While Walmart has not yet fully entered India, the firm is reportedly preparing to enter the country under a similar marketplace model after registering a new company, Walmart India Private Ltd, in January.

Currently, the company operates 20 “Best Price Modern Wholesale” stores (wholesale-only operations) across the country, but has yet to provide a timeline for entry into multi-brand retail.

DIPP Floats E-Commerce Discussion Paper

Revelations of Amazon’s U.S. lobbying efforts follow the January release of a discussion paper on e-commerce in India by the Department of Industrial Policy and Promotion (DIPP).

Intended to solicit comments on the subject from policymakers and industry leaders, the discussion paper outlines general statistics on e-commerce, the status of e-commerce in India, existing regulations and various advantages and disadvantages of 100 percent FDI in B2C e-commerce.

Key disadvantages noted by the discussion paper include global players having an “adverse impact” on India’s domestic e-commerce industry, the inability for ‘brick and mortar’ shopkeepers to compete with e-retail and the possibility that e-commerce would hinder the development of Indian-owned and led B2C e-retailers.

While all major political parties currently contesting elections in India have explicitly opposed liberalizing FDI in retail and e-commerce, many major players such as Amazon, eBay and Walmart appear to view retail FDI liberalization as an open-ended issue.

On the sidelines of the recent World Economic Forum (WEF) annual meeting in Davos, Switzerland this January, Walmart CEO Doug McMillon reportedly told reporters the company was still studying the feasibility of FDI in multi-brand retail before finalizing an entry timeline.

“We will respectfully wait, answer all questions and try to demonstrate that having Walmart in India is a good thing for the country,” McMillon said.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email india@dezshira.com or visit www.dezshira.com.

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