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In an attempt to ease foreign investment rules, the government has reportedly drafted a proposal to allow ecommerce multinationals like Amazon to purchase goods directly from Indian sellers and sell overseas.
Foreign ecommerce companies are so far barred from selling goods directly to consumers – both within and outside the country and can operate only as online marketplaces that connect buyers and sellers for a fee.
The restrictive policy has long been a sticking point between India and the US, with American giants like Amazon lobbying the Indian government to relax the export restrictions. The proposed changes, according to a Reuters report, come as India and the US try to iron out differences along the way to a protracted trade deal.
The government is weighing the export relaxation despite growing resentment among various associations representing millions of small brick-and-mortar retailers who have been vocal against Amazon’s demand. The groups argue that the US giant’s deep financial resources would be detrimental to their businesses.
Less than 10% of small Indian businesses selling online domestically participate in global ecommerce exports, “constrained by complex documentation and compliance requirements”, Reuters reported, citing a 10-page proposal from the Directorate General of Foreign Trade (DGFT).
The proposal outlines a third-party export facilitation model, under which a dedicated export entity associated with ecommerce platforms would handle the compliance part.
The DGFT draft said the relaxed rules would apply solely to exports, with any violations subject to strict penalties and potential criminal action.
The proposal awaits a sign-off from the Cabinet.
The development comes at a time when Amazon will be paying $2.5 Bn to settle claims over misleading Prime subscription tactics. The company agreed to pay the amount to settle allegations that it misled millions of customers into enrolling in Prime.
The Federal Trade Commission (FTC) announced the settlement on Thursday, describing it as one of its biggest wins against ‘dark patterns’ design tactics that push users into opting in unintentionally.
As quick commerce has swept through the market, Amazon recently launched its 10-minute delivery service in Mumbai to catch up with the festive spirit, after launching pilots in Bengaluru and Delhi. According to the company, the response in the first two cities exceeded expectations, with daily orders growing 25% month-on-month and Prime members tripling their purchase frequency after adopting Amazon Now.
Amazon India’s marketplace arm, Amazon Seller Services, reduced its FY25 losses nearly 90% to INR 374.3 Cr from the INR 3,469.5 Cr a year back, while its operating revenue zoomed 19% to INR 30,138.6 Cr from INR 25,406 Cr.
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