India’s Snapdeal On Board With New eCommerce Rules

Snapdeal, the Indian eCommerce company, is backing India’s new eCommerce rules that will hurt Amazon.com and Walmart, saying in a letter to the federal government that protests over the new legislation underscore just how necessary is is.

Reuters, citing the letter Snapdeal penned on Jan. 25, reported Snapdeal said some unnamed companies were taking advantage of “glaring loopholes” to operate inventory-based eCommerce models. The letter went on to say the “loud protests” over the new rules set to take effect Feb. 1 were an “indication of how effective this regulation” will be. Snapdeal Chief Executive Kunal Bahl wrote in the letter that the current timelines for foreign companies to meet the new rules are “adequate for compliance,” noting it has updated its tech processes and expects to comply on Feb. 1. “Every nation has a right to frame policies that best suit its economic and social needs,” Snapdeal said in its letter.

Under the new rules, which are aimed at helping India’s smaller merchants as Amazon and Walmart set their sights on the country, multinational eCommerce companies will have to overhaul their business structures and spend more money on compliance. They are also barred from striking exclusive deals with manufacturers. At the same time that Snapdeal is saying it will easily make the deadline, both Amazon and Walmart have requested extensions to the deadlines. They have argued they need extra time to understand and put in place the new rules.  Sources have told Reuters that the Indian government led by Prime Minister Narendra Modi will not grant extensions to Amazon and Walmart an extension because Modi needs the backing of smaller traders in the general election in May.

Amazon and Walmart are pouring billions of dollars into India, with Amazon earmarking $5.5 billion in investments and Walmart spending $16 billion to buy Flipkart, the Indian eCommerce player. Both want a piece of the growing eCommerce pie in the country as more people embrace online shopping. Prior to the new regulations, Reuters noted Morgan Stanley forecast the Indian eCommerce market to grow 30 percent annually, hitting $200 billion by 2027.