US, India spar over e-com business models, policies

The US wants its companies to operate on the inventory model, India resists

- Dhirendra Kumar

American trade negotiators are pushing for a level playing field for US-based e-commerce companies such as Amazon and Walmart-owned Flipkart with Indian firms such as Reliance, two people aware of the matter said.

The discussions, held during trade talks between the two countries in Washington till 8 March, did not succeed in resolving the differences, the people cited above said on condition of anonymity. However, both sides have agreed to continue the discussion.

"The issue of providing more access and a level playing field to US-based e-commerce firms came into discussion during the recent talks for a bilateral trade agreement in Washington," said the first person.

However, the demand for a change in policy framework to allow US-based firms to operate on the inventory model (where platforms own and sell products directly) has not yet been "accepted" by the Indian negotiators, and talks are ongoing to find a middle path to adjust the policy framework, this person said.

Currently, foreign e-commerce firms are permitted to operate on the marketplace model in India, where they just connect buyers and sellers.

India, on its part, maintained that its policies aim to ensure fair competition and protect small businesses, while also safeguarding consumer interests, the first person added.

"The plans in progress include limiting full access to the inventory-based e-commerce model, with India potentially allowing these companies to participate under certain conditions while maintaining regulatory control," said the second person.