Until now, India has had a strict ban on who could sell products online in their country. The FDI (Foreign Direct Investment) prohibited companies who manufactured products in India from selling via ecommerce platforms- companies like Nike and Puma. Non-Indian companies could only operate as marketplaces for Indian-based goods. Soon though, this may all change.
Narendra Modi, India’s new Prime Minister, has expressed that he would like to open India to foreign businesses. This includes the ecommerce sector, which currently is a booming 13 billion dollar industry in India. The proposal to lift the ban on FDI was presented by Finance Minister Arun Jaitley. It’s proposition to relax FDI rules for manufactured goods by foreign retailers is expected to help the ecommerce industry expand.
As the second most populous country in the world, the potential for ecommerce to take off is formidable. Chinese mega-giant Alibaba is investing in Indian ecommerce companies, and sites like Rakuten, Walmart, and Amazon all want in. This could result in threatening competition for Indian based marketplaces Flipkart and Snapdeal. Flipkart, India’s largest ecommerce company (according to revenue numbers), had originally modeled its business off of Amazon’s. They began as a bookseller, and later merged into selling apparel, electronics and then their own goods. Unlike Amazon, Flipkart has only 3,000 sellers. Amazon has more than 25 million worldwide. Not surprisingly, Flipkart adamantly opposes the lift of the ban.
At this point, it’s hard to predict what exactly this could mean for U.S. based sellers who use these marketplaces, but one thing’s for certain- if the greatest powers in ecommerce are lining up to get in, you definitely don’t want to be left out.
Bose, Nandita. “India Takes Step towards Allowing Foreign Investment in E-commerce.” Reuters. Reuters, 10 July 2014. Web. 10 July 2014.
Kaplan, Marcia. “Ecommerce in India Takes Off; Potential for U.S. Sellers.” Practical Ecommerce. Practical Ecommerce, 10 July 2014. Web. 10 July 2014.