Apple, Amazon, Facebook, Google face India ecommerce crackdown

Amazon CEO Jeff Bezos.
Reuters

• Life may get harder for big American tech firms trying
  to break into one of the world’s biggest online shopping and
  mobile markets.
• India is proposing new laws that would protect
  homegrown companies trying to compete with the likes of Amazon,
  Facebook, Google, and Apple in online shopping.
• India wants to level the playing field for domestic
  startups, store Indian user data in India, and change the rules
  around how foreign companies sell online in India.
• It could cost US firms dearly because India is
  predicted to become a $32 billion ecommerce market by the end
  of this year.

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Apple, Amazon, Google, Facebook and other US tech titans are
facing major hurdles on selling online in India, thanks to a new
ecommerce bill which prioritises homegrown firms.

According to The Wall Street Journal, which has seen a draft
of the bill, the new rules would create a hostile environment for
foreign tech giants, despite India being relatively open to
outside competition. The Economic Times
also reported on the proposals at the end of July.

Here are the most drastic changes being proposed in the draft
bill:

• The creation of a “level playing field” which would
  prioritise Indian startups.
• Indian users’ data would need to be stored exclusively in
  India, potentially denting the tech giants’ online ad businesses.
• Clamping down on loopholes that allow the likes of Amazon to
  skirt government rules around foreign ownership of retail.
• Marketplace companies are currently restricted from holding
  inventory, but those restrictions would no longer apply to
  Indian-controlled companies selling Indian products.

It isn’t clear when the draft policy might become law, and local
media reports suggest
it has been widely criticised and is still under review by
government officials.

India’s ecommerce market will be worth $32 billion in 2018,

according to statistics from eMarketer. This is still small
compared to the US, where eMarketer estimates Amazon alone will
clear $258.22 billion in revenue, but the important number to
look at is growth. India’s ecommerce sales will rise 31% year on
year this year, putting it behind only China and Indonesia.

Adobe stats peg US ecommerce growth this year at around 18%
year on year so far.

That makes India an extremely important focal point for US
companies seeing their home markets slowly level off, and looking
for future growth. Amazon CEO Jeff Bezos said in 2016 that the
company
would funnel $5 billion into its Indian ecommerce operation.
The company doesn’t break out Indian revenue in its financials,
but its overseas operating losses show that the company is
willing to lose money in order to beat local players.

Flipkart’s
Chief Executive Officer (CEO) Kalyan
Krishnamurthy.
Reuters/Saumya
Khandelwal

It’s that attitude which appears to have the Indian government
alarmed.

China, another potential source of major growth, has created
safeguards for its homegrown firms. As a result, the likes of
Tencent, Alibaba, and Meituan dominate their home market and are
worth billions — while foreign US firms struggle to achieve the
same market share.

In India, major ecommerce firm Flipkart was acquired by Walmart
for $16 billion.

And Vijay Shekhar Sharma, India’s youngest billionaire and
founder of ecommerce payments firm Paytm, hit out at foreign
rivals in February. He wrote that India “must not let them
colonise our Internet.”