Amazon Faces New Competition In India

While Amazon and Walmart are competing for eCommerce dominance in India, they might be overlooking a key rival in the country: Mukesh Ambani, the country’s richest man.

With India expected to be a $1 trillion digital economy by 2025, online retailers all want a piece of the action. In June, it was reported that, after committing $5 billion to investments in India, Amazon reportedly wants to increase its investment by $2 billion. And, earlier this month, India’s anti-trust regulator approved Walmart’s $16 billion acquisition of online marketplace Flipkart.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of eCommerce in the market,” Walmart’s CEO Doug McMillon said.

However, according to Bloomberg, if a new national eCommerce policy becomes law, it will be harder for these U.S.-based retailers to get a stronghold in India.

Currently, foreign-funded firms aren’t allowed to hold eCommerce inventory in India. While Amazon was hoping that those rules would be loosened, the proposed policy actually calls for harsher controls — even on the phantom sellers that Amazon and Flipkart have been using to get around the problem. That means the eCommerce giant, and its preferred resellers, won’t be able to offer deep discounts on its items.

Meanwhile, Ambani’s Reliance Retail, can easily control and improve its supply chains while building a bigger online presence in partnership with mobile operator, Reliance Jio Infocomm.

In addition, the policy includes a two-year period, after which, India-generated data from social media, search engines, or eCommerce will have to be stored on local servers, which will increase costs for Western firms.

It is expected that the proposal will become a law. In fact, the Central Bank of India is already directing all payment firms like Visa, Mastercard and PayPal to keep their Indian data exclusively in the country by October, so there’s no reason to expect that rules for eCommerce data won’t be just as tough.