INDIA – India is targeting Amazon and Walmart with new laws that seek to clip their influence on India’s US$1 trillion retail market in an effort to protect and promote the growth of local startups.

According to a report by Bloomberg, the new policy seeks to prescribe a code of conduct for online retailers and define the cross-border flow of user data and may raise costs and stymie expansion plans of these multinational retail behemoths.

The new laws are seen as a reaction to complaints from India’s small retailers- which are a crucial part of Prime Minister Narendra Modi’s support base- that Amazon and Walmart-owned Flipkart flout federal regulations and that their business practices hurt small traders.

The latest proposals build on existing laws that curb the two U.S. companies from offering deep discounts, deter exclusive arrangements with preferred sellers, and investing in merchants offering products on their websites.

According to the draft policy, India’s retail sector has evolved rapidly and brought major regulatory challenges such as “maintaining a level playing field, influence of monopolistic tendencies and a need to maintain symmetric information to exert free choice, and the loss of business for the small retail trader segment.”

The new comprehensive e-commerce policy will address small retail growth and aim to “reduce prevalent market distortions,” the draft note said.

Additionally, the draft proposals seek to ensure algorithms created by e-retailers do not discriminate against sellers.

The government also wants to ensure that data emanating from India is for local entities first. Among the safeguards being considered are regulating cross-border flow of data of Indian users and audits.

“Violation of safeguards shall be viewed seriously and attract heavy penalties,” said the note titled Draft Ecommerce Policy.

Enforcement Directorate seeks details of Amazon India operations

As the law takes shape,  India’s Enforcement Directorate (ED) recently asked Inc. for information related to its operations in the country, as the agency continues to investigate the US retail giant for possible violation of foreign investment rules.

The investigation comes at a time when a recently released Reuters report claimed that the US e-commerce giant has for years given preferential treatment to a small group of sellers on its India platform and used them to circumvent the country’s foreign investment rules.

Amazon in its defense said it was confident of its compliance with Indian law adding that it “does not give preferential treatment to any seller on its marketplace,” and that it “treats all sellers in a fair, transparent, and non-discriminatory manner.”

Tata Digital seeks CCI approval to acquire BigBasket

Meanwhile, Tata Digital is taking its plans to buy a majority stake in Indian online grocery platform BigBasket, a notch higher by seeking acquisition approval from the Competition Commission of India (CCI)

The Tata-BigBasket deal, if approved, would put the conglomerate in direct competition with Amazon, Walmart’s Flipkart, and Reliance Retail’s JioMart, backed by billionaire Mukesh Ambani.

In the filing with the CCI, Tata Digital Ltd., a wholly-owned unit of Tata Sons, proposes to buy 64.3% of an entity that runs business-to-business sales for BigBasket.

The proposal comes as e-commerce sales, especially of food and groceries, have exploded in India as the Covid-19 pandemic spurred a shift to online shopping.

In its recently released report, Financial firm FIS said that India’s e-commerce market is poised to grow by 84 percent to US$111 billion by 2024.

According to FIS, this growth will be mainly driven by mobile shopping, which is projected to grow 21 percent annually over the next four years.

As such, BigBasket’s rivals are expected to spend heavily on the e-grocery business.

Flipkart has already announced plans to expand to more Indian cities, while Jio Platforms, Reliance’s digital unit which is likely to support its grocery service, has raised more than $20 billion from investors including Facebook and Alphabet Inc.’s Google.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE