With the announcement of the Indian Prime Minister possibly allowing Foreign Domestic Investment (FDI) in Ecomerce, many firms are rejoicing, but not all of them.
India’s largest Ecommerce platform FlipKart, surprisingly, has publicly stated the firm is not in favor of opening up of FDI in the online retail sector. FlipKart’s announcement stated the change in policy will “help only one company”, a direct reference to Amazon.
Amazon has been trying to enter the growing Ecommerce market for some time now, but with the restrictions brought upon by India’s FDI policy, the firm cannot operate as it does in other countries like the US and the UK. The Ecommerce giant has gone as far as to discuss the matter of leniency on FDI restrictions with government officials. Due to Indian law, Amazon cannot conduct business as a supplier and holder of inventory, but rather has been forced to work by the marketplace model to continue operations in the country.
”The only e-commerce player that will benefit from such a move is a company which is already operating in India as a marketplace and wants to enter the country through an inventory based model,” said a FlipKart spokesperson.
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FlipKart started its business as an inventory based platform. When the firm looked beyond India’s borders for funding, the FDI regulations forced FlipKart to switch to the marketplace model.
It seems FlipKart is up in arms at the Indian government, and its making its feelings publicly known could be the result of the model shift forced upon the Indian firm. No final decision has been made as of yet by the Indian government. The rumored announcement is planned to be made at the end of the month.