Amazon India faces a major bureaucratic roadblock

Amazon India faces a major bureaucratic roadblock

Summary: Foreign Direct Investment comes with a dangerous clause for e-commerce

TOPICS: India, Amazon

As it turns out, Amazon India's full fledged operations in India will have to deal with another legal and bureaucratic hurdle. The Indian government's recent decision to allow Foreign Direct Investment (FDI) in Indian retail has led to a political storm. While the government is working with the opposition and its allies, more details about the government's FDI plans are surfacing. According to a new report by Live Mint, the FDI in retail approval comes with a clause for e-commerce operations in the country.

Surabhi Agarwal & Asit Mishra's say companies (local and international) with foregin investment won't be allowed to sell goods online. It's that simple. The provision should bring a huge smile to India's current ecommerce leader--Flipkart. The company raised $150 Million last month and continues to grow with no real competition. And here's the slight twist, the FDI provision exempts investments through private equity and venture capitalists.

The ramifications of this addition are yet to be understood. Amazon recently launched the Kindle Store in India, whether the company will have to suspend these operations is unknown. (The Kindle Reader sales will most likely be allowed to continue since they are sold through TATA Croma. Though Amazon is being seen as one who'll lose out the most, brands like IKEA and even local companies will be affected.

Given how things work in India, there will certainly be a jugaad to navigate through this. At the moment allowing FDI in Indian retail looks like a 1 step forward and 2 step backward move.

h/t @tsuvik for the story

Topics: India, Amazon

Manan Kakkar

About Manan Kakkar

Telecommunication engineer with a keen interest in end-user technology and a News junkie, I share my thoughts while preparing for my Master's in Information Management.

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  • That kind of stupid protectionism is so short sighted

    I cant believe the even the local Indian tech companies arent throwing huge protests over this. It's a recipe for staying a decade or two in the past.
    Johnny Vegas
    • Protectionism is good for them, not everyone else...

      But it depends on how it's applied, I suppose...
      • good for them

        is arguable
  • Wretched governments

    What we need is a one-world government to go with our globalized economy...
    • One world government

      We need a decentralization of all government, restricting them to enforcing contracts and protecting property.
  • blackalsh much?

    This could also spark a backlash here in the U.S. After all, tens of thousands of U.S. jobs have been outsourced to India, and now we learn that U.S. companies are not allowed to use the internet to sell our products in India. The lesson seems to be that the Indian government wants our jobs but not our business. From a PR perspective, that's pretty bad.
    • Rethink!

      India supposedly buys a few billion dollars worth of military equipment from the US...I expect that provides employment to a number of American citizens...does it not? You can't have everything in the world. This ain't 1945 boy!
      • It's about protectionsim

        It's not about having it all. It's about fre trade vs. protectionism. Mercantilism leaves a sour taste in the mouths of citizens of free trader nations who see their relative competitive advantages stymied by protectionsit measures that they, themselves, do not impose on said mercantilist nations.
  • Mercantilism, Protectionism

    Western countries practise their own form of mercantilism, in the form of draconian and ever-tightening patent and copyright restrictions. Developing countries like India and China get pressured into perpetuating the same sorts of stupidity as a prerequisite for access to so-called "free trade" deals. What kind of "free trade" is it to lock in market restrictions?
    • Yeah! We don't need no copyright or patent laws!

      That sure worked in the USSR.

      Oh, wait. China is now adopting those laws, too.

      Why? Because if you can't own intellectual property, why do the hard work of inventing anything, if just anyone can steal your idea?
      • Re: if just anyone can steal your idea?

        How can you own an idea?

        “If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

        “That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property. ”
        -- Thomas Jefferson
  • be indian buy indian

    The reason for the opposition applies in India too.