By Aditya Kalra and Aftab Ahmed
NEW DELHI (Reuters) -Amazon is lobbying the Indian government to ease its foreign investment rules to allow the U.S. company to buy products directly from Indian sellers to sell in overseas markets, four people with direct knowledge of the matter said.
India currently prohibits companies like Amazon and Walmart from stocking and selling goods directly to consumers, allowing them only to operate an e-commerce marketplace to connect buyers and sellers for a fee. The restrictions, which aim to protect small retailers, also apply to exports.
Amazon executives asked the Indian Commerce Ministry in a meeting on Thursday to exempt exports from the policy – which would allow Amazon India to buy the goods itself from sellers to sell to international customers, the four sources said.
The policy restrictions that Amazon and Walmart face have for years been a sore point between New Delhi and Washington, which are also currently struggling to strike a trade deal.
Three industry groups backing small retailers opposed any more easing of restrictions for Amazon and Walmart’s Flipkart – which also attended the meeting, the sources added.
The retailer groups reiterated their long-standing concerns that Amazon and Flipkart have hurt small Indian retailers for years by favouring select big sellers online, and offering discounts, which hurt smaller businesses.
The U.S. companies have always maintained they comply with Indian laws. On Friday, Amazon India and Flipkart did not respond to Reuters queries.
India’s Commerce Ministry did not immediately respond to Reuters queries.
Amazon said in December it helped to generate $13 billion in cumulative exports for sellers from India since 2015, and plans to take that to $80 billion in total by 2030.
Amazon and Flipkart are leading players in India’s e-commerce market, which was estimated to be worth $125 billion in 2024 and is set to top $345 billion by 2030, according to India Brand Equity Foundation.
Amazon said during Thursday’s meeting that exempting exports from the rules would benefit small sellers as the company could help to facilitate customs clearance processes, giving sellers greater access to international markets, three of the sources said.
“It was a heated meeting … the small traders and their supporters opposed it saying they wanted no concession for foreign e-commerce players,” said one of the four sources, who attended the meeting.
The internal government agenda of the meeting, seen by Reuters, shows New Delhi has not yet reached a decision.
The document said the government wants to ensure that any changes to the policy to exempt exports will not allow foreign e-commerce companies to “engage in direct sale of listed goods/products to Indian consumers”, which would hit small retailers.
Any changes to the policy should “ensure sufficient demarcation between the goods/products meant only for exports and other … meant for sale to Indian consumers,” the government document said.
(Reporting by Aditya Kalra and Aftab Ahmed. Editing by Jane Merriman)
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