Amazon talks with Indian government on FDI restrictions

Amazon.in, the Indian subsidiary of Amazon, is in negotiations with the Indian government to ease on their Foreign Direct Investment (FDI) policy for Ecommerce entities.

Amazon opened their Indian counterpart in June of 2013, and until now has adopted the Indian marketplace model. India’s FDI policy prohibits any foreign company from investing in the country. The policy also imposes Ecommerce restrictions, and does not allow for direct retail of products, but allows for Ecommerce platforms to serve as a marketplace for sub-merchants.

While Amazon is a marketplace for other sellers, they also are an immense retailer of their own, and have their own line of products and services which cannot be directly offered by Amazon in India due to the policy. Because of these restrictions, Amazon is currently in negotiations with the Indian government to ease its policy and allow them to adopt the hybrid marketplace model that Amazon is known for, allowing sub-merchants and direct retail.

“We are engaging with the government to relax FDI norms in e-commerce space. We believe FDI in e-commerce is good for the customers. Not only will they get more choices but it will also improve the level customer service for the industry,” Amazon Director and General Manager Amit Deshpande said on the negotiations.

India is a fast growing market with a lot of potential, but its government’s limitations are preventing any outside Ecommerce entities from entering it fully. If Amazon is successful with their negotiations, we should see more companies entering the Indian market to offer their services, and not only the services of others.