Walmart in warning about India e-commerce rules

Sat, 2019-07-13 02:23

NEW DELHI: Walmart told the US government privately in January
that India’s new investment rules for e-commerce were regressive
and had the potential to hurt trade ties, a company document seen
by Reuters showed.
The lobbying effort yielded no result at the time — India
implemented the new rules from Feb. 1 — but the document
underlines the level of concern at Walmart about the rules.
Differences over e-commerce regulations have become one of the
biggest issues in frayed trade ties between New Delhi and
“It came as a total surprise … this is a major change and a
regressive policy shift,” Walmart’s Senior Director for Global
Government Affairs Sarah Thorn told the Office of the United States
Trade Representative (USTR) in an an email on Jan. 7.
Just months earlier, Walmart had invested $16 billion in Indian
e-commerce giant Flipkart, its biggest ever acquisition
In a statement to Reuters on Thursday, Walmart said it regularly
offers input to the US and Indian governments on policy issues and
this was a “past issue and Walmart and Flipkart are looking
“Walmart has had good consultations with the government of
India,” a company spokeswoman added.
The USTR did not respond to a request for comment.
In the January letter to the USTR, Walmart said it wanted a
six-month delay in the implementation of the rules, but that did
not happen. Washington did raise concerns about the policy with New
Delhi, but India gave a non-committal response, an Indian trade
ministry official told Reuters at the time.
Walmart’s problems in India highlight the regulatory
complications it faces as it restructures its international
business to boost growth and online sales. Mexico’s competition
regulator recently blocked its acquisition of delivery app
Cornershop, while in Britain it was stopped from merging its
British arm Asda with rival Sainsbury’s.
These issues, however, have failed to unnerve Walmart investors.
Walmart shares have risen 21 percent, compared with a 19 percent
increase for the S&P 500 since the start of the year.
A USTR delegation led by Christopher Wilson, Assistant US Trade
Representative for South and Central Asia, was to meet Indian
officials in New Delhi on Friday to resume discussions on trade
ties and the e-commerce issue was likely to be high on the
In its January representation, Walmart told the USTR that India’s
new policy wasn’t good for global businesses, highlighting that
its foreign direct investment would help Flipkart grow and result
in “significant” tax revenues for New Delhi.
“Changing rules to hinder international business following major
investments … will have important implications for India FDI
goals and add unnecessary pressure to trade discussions,” Walmart


• Walmart strongly protested India e-commerce rules with US

• The lobbying failed but document shows how concerned Walmart

• Walmart warned policy could strain India-US trade ties:

• Walmart calls it past issue, says company looking ahead.

The new rules barred companies from selling products via firms
in which they have an equity interest and also from making deals
with sellers to sell exclusively on their platforms. removed thousands of products from its India website
briefly in February as it initially struggled to comply with the
new policy. Flipkart was forced to rework some of its vendor
relationships, sources told Reuters at the time.
The policy, implemented by Prime Minister Narendra Modi months
before his re-election in May, was seen aimed at winning the
support of small Indian
traders, who had long complained they were losing business due to
the steep discounts offered by foreign e-commerce giants.
“The action appears in every respect … intended to placate
Indian companies and local traders,” Walmart told the USTR.
Reuters obtained the two-page representation Walmart sent to the
USTR through a Freedom of Information Act request first filed in
January. The USTR in February provided a heavily-redacted version
of the document, citing confidentiality reasons. In consultation
with Walmart, it withdrew most of those redactions this week
following an appeal from Reuters.
Although Reuters asked for both Amazon and Walmart’s
communications, the USTR responded saying it found only one email
with Walmart’s representation between Dec. 22 and Jan. 28, the
period for which the records were searched.
Since the policy has been announced, Indian oil-to-telecoms
conglomerate Reliance Industries has repeatedly talked about its
plans to diversify into e-commerce.
Walmart’s document released to Reuters did not name Reliance, but
the Bentonville, Arkansas-based company argued the policy
discriminated against foreign firms, and not just in favor of small
domestic players.
“The purported rationale of such regulations is to protect small
retail players who are seen to be threatened,” Walmart said, but
added: “This argument does not account for why there should be
differentiated treatment between large foreign eCommerce companies,
and large domestic companies.”
In the past six months, several Walmart executives have also
weighed in publicly on India’s new e-commerce policy, including
Chief Executive Doug McMillon, who said in February the company was
disappointed by the Indian government’s decision.
“We hope for a collaborative regulatory process going forward,
which results in a level playing field,” he said.
India’s Commerce Minister Piyush Goyal has said the government
was committed to protecting small traders, but open to ironing out
policy-related issues. Goyal said on Twitter on Wednesday he had
met Walmart International’s CEO, Judith McKenna, and discussed
ways of boosting sales of Indian-made products.
In a meeting last month, however, Goyal warned both Flipkart and
Amazon to comply with the new rules in letter and spirit, and
questioned them on their discounting policies, Reuters
The Walmart spokeswoman on Thursday said that, in line with the
company’s commitment to India, it looked forward to contributing
to the country’s retail ecosystem.
Amazon was not aware of Walmart’s January representation to the
USTR, according to sources. The company in a statement said it
continued to engage with New Delhi to enhance infrastructure and
create jobs.
Walmart told the USTR in January that its unit Flipkart, as well as
Amazon, had opened many new distribution centers over the past
three years in India, creating thousands of jobs.
It warned of “serious consequences” if the new policy was
implemented hastily. “The lack of policy stability makes it very
difficult for companies to continue planned investments, both in
the eCommerce sector and beyond,” Walmart wrote.

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Walmart in warning about India e-commerce rules