The E-commerce Seesaw

The Indian e-commerce market has seen rapid growth over the last few years. And at 30 percent CAGR in the period, 2017-2021, is perhaps one of the fastest growing in the world.

The sector saw major participation from US companies. Whereas Walmart invested USD 16 billion last year to acquire Flipkart, Amazon, which had already invested USD3 billion (Rs 20,000 crore), put in another Rs 2600 crore into its India business unit, Amazon Seller Services just ahead of the Walmart-Flipkart deal in May 2018. This was when Amazon had already pumped in Rs 1950 crore in January 2018 and Rs 195 crore in Amazon Pay (India) in March 2018. Subsequently, the company invested another Rs 2700 crore in August 2018 and Rs 2200 crore in November 2018. The total capital infusion amounted to over Rs 10,750 crore (USD 1.6 billion) in a year.

Not resting on its laurels, the parent company, Flipkart Marketplace Private Limited, Singapore, responded with an infusion of about USD 66 million into PhonePe in August 2018. It also pumped USD 487 million into Flipkart Internet Private Limited in September. More recently, it infused USD 305 million in the wholesale business unit of the group. The companies while investing in infrastructure, staff, and marketing including fulfillment centers, together spent an additional USD 1.5 billion to expand their private labels, putting together 30 private labels covering 200 different categories. They have now formalized major entry plans into rural areas, which accounted for more than USD 400 billion in retail sales in 2018.

Is it any surprise, that when on January 3, 2019, the DIPP issued a press note adding further nuance to existing regulations governing the e-commerce sector, the two companies which typically control nearly 85 percent of all e-retail in India in value terms, came together to voice their concerns with the government and sought platforms as CII and FICCI?

With Indian exports to the USA far exceeding Indian imports from the US, WTO pressure for free trade and export subsidies mounting, and the need to take populist measures to appease traders ahead of general elections 2019, the powers-that-be have a tough balancing act ahead!―TV Veopar Journal Bureau

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