India is one of the biggest emerging economy in the globe when it comes to digital progress. The top companies from Silicon Valley have invested plenty on it to acquire higher profit in future. However, new regulations put in place are now threatening these businesses.
These restrictions implemented on the e-commerce websites on Friday has been aimed to prevent the global retailers like Walmart (WMT) and Amazon (AMZN) from the use of deep pockets or massive scale for driving down the prices in the country. The proposed changes in the legal department would now require the social media based companies such as Twitter and Facebook for monitoring and taking down the content with the request of the Indian authorities. This move is required because the critics say that this content might actually be misused for the censorship purpose.
These new rules actually highlight risks the global technology giants might experience in the country that they think might be the next frontier for growth. These rules were announced back in December for the e-commerce giants and looks forward to curb the practices such as steep discounts which actually helped companies like Amazon to dominate the U.S. market while making huge progress in India.
These rules mention that the foreign retailers over the online platform might no longer make deals with the companies for offering products which aren’t available anywhere else. Further, these rules also prevent the foreign platforms from listing products distributed by the companies that they invested in. This would evidently push down Amazon’s business substantially given the fact that it had snapped up its stakes in multiple local suppliers.
Amazon and Flipkart, which is owned by Walmart, for long, had been pushing the country’s legal scenario for long to add a delay to implementation of these rules. However, on Thursday in an official statement released by the government, it was mentioned that the government has given all possible consideration to the implementation of these rules and it’s time to get going.
Amazon, in a letter to the Indian government, asked for a 4 month extension period in order to comply with new rules. With more than 400,000 sellers along with multiple transactions occurring on a daily basis over Amazon’s India based marketplace, the officials would need time for understanding policy details.
Flipkart also asked the government for 6 months extension. The company warned that this new policy might actually bring in significant disruption among the customers.