Expressing concern over India tightening restrictions on foreign e-commerce companies operating in the country, leading American industry advocacy groups have said that such a move would have a long-term negative impact on the foreign direct investment as well as consumers. Earlier this week, the government announced changes to the foreign direct investment policy for the ecommerce sector, which would end discounts and cashback offers that online platforms with foreign investment were offering. Flipkart and US-based Amazon -- the two largest players in the burgeoning Indian e-commerce sector -- are expected to be hit the hardest once the new norms come into effect from February 2019.
"The new e-commerce restrictions announced by the government of India on December 26 are a cause for concern. While we are still trying to understand the full implications, we fear that these restrictions will have a far-reaching negative impact both on US investments and on Indian consumers," said Nisha Desai Biswal, president of US India Chambers of Commerce (USAIC), a wing of the US Chambers of Commerce.
The former Assistant Secretary of State for South and Central Asia said the US-India Business Council (USIBC) said that a February 1 deadline is too rushed and does not allow sufficient time for companies to analyse the policy and to comply. Referring to Union Commerce and Industries Minister Suresh Prabhu's remarks that he wants to focus on bringing USD 100 billion FDI to India, Aghi said the first thing is to have a predictability in a regulatory environment.