Amazon and Walmart face new challenges in India beginning next year. Rules around online selling are very different in India compared to other parts of the world, and the Indian government announced on Wednesday new rules that will make it more difficult for American companies to get around those restrictions.
The Wall Street Journal explained that current rules forbid non-Indian online sellers from holding their own inventory and shipping it out to consumers. The publication said Amazon and Walmart have worked around the rule “by operating as online marketplaces and selling what are effectively their own products held by their affiliated local companies.”
CNN indicated some reasons for the new rules, such as preventing a race to the bottom in pricing. “Amazon and Walmart face new rules in India that could prevent them from using their industry expertise and massive size to drive down prices.”
It also said Amazon and Walmart will be unable to deploy some of the strategies that made them successful in the US, “including steep discounts and exclusive product offers.”
Walmart invested $16 billion in Flipkart this year, becoming the majority owner. (eBay had sold eBay India to Flipkart in exchange for a minority stake in 2017, then sold its holdings in Flipkart and relaunched eBay India after the 2018 Walmart investment.)
The new rules go into effect and can be found on the Indian government website in this PDF file.