New norms may freeze Flipkart, Amazon models

blr_p

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True, it was done during the UPA regime. But the IT and Jaitley kept dogging the companies for more tax payouts. Jaitley could have easily amended the bill or get it squashed, but the guy wants more taxes and the IT dept wants more taxes.
China is ten times more better than India for doing business even if they steal IP or blueprints. If you're doing business with China you already know that something will get stolen and it will be stolen. You just have to worry about that and a few corrupt government policies and officials. End of day if you feel like pumping a billion dollars in some Chinese company, you can rest assured that you can sell stuff both inside and outside China. Chinese govt are not that slow witted to kick companies doing business with them. I think Tesla and some Japanese auto makers are setting up electric auto plants inside China now. See anyone of them even think of India? No. That's because they know its never going to pay to build a plant here when India has lots of such local carmakers who have the govt in their pocket.
For now. What if the trade war between the US & China intensifies ?

Trump wants to reduce the trade deficit presently to the tune of $350bn with China to a manageable level. At the same time China will resist it as otherwise people there will be out of work and this means social instability. Neither party will back down. If they come to a deal then China keeps those investors otherwise those investors will get spooked and look elsewhere and this is where India comes in. In any case as wages rise in China there will always be a price advantage with India.

In India you never know when some mantri will wake up from his sleep one day and do something that will make you think twice about selling your stuff here. Companies see history as a whole and not entirely depend on the future projections while taking such decisions. With just one bad law, Amazon and Walmart have lost a few million customers. You say there is one month. Why would the govt haggle anything when they are deep inside some companies pockets? What makes you think they will go back on their word or amend the bill? Future companies like Tesla who want to invest in India will look at what happened to Amazon and Walmart - both extremely huge companies and decide whether they can absorb such losses. A company can plan for losses that are seen and unseen. But such losses where suddenly they are told they can only put money inside and not sell anything will send wrong signals.
Same applies to Indian companies as well, why invest a fortune only to have govt wrk against it. No, if companies are investing then they have a good idea of risk.

Why allow online commerce at all ? they relented and we know what the size of the ecommerce segment is like and it will continue to grow. This is a good source of tax revenue. If we have understood this move completely it means that ecomerce will be affected. I find it hard to believe we are going to turn the clock back to pre-amazon/flipkart days

Besides India, there are other countries where there are low wages and infrastructure is coming up. Example - some African countries, Vietnam, Philippines, Brazil etc. India is not in a good position to do such stupid election ploys and drag third party people not interested in government into their petty politics.
We have the potential for scale.

When push comes to shove, foreign companies will just leave and we'll be sitting on the ground thinking what happened. No one is going to care they lost 1 billion supposed customers who were never there to begin with because of subsequent bad governments and their policies.[DOUBLEPOST=1546428818][/DOUBLEPOST]I wonder if Amazon and Walmart will drag India to the World Trade Organisation for discriminatory trade practices. These policies are clearly against them and made to increase sales of domestic companies. I think they will have a solid case file against India. It will take months to get a judgement from WTO but it will be worth it.
WTO is a possibility. Though we are supposed to have rule of law here too. There could be other angles as well. I'm seeing this solely through a domestic lens.

Just watch this topic and post if you see something relevant. We will have a better idea after some time. Whether initial assumptions were correct or not.
 

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How does selling private labels make much difference. The key contention was this no more than 25% inventory online thing. What is the change there ?
 

adventureguy

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How does selling private labels make much difference. The key contention was this no more than 25% inventory online thing. What is the change there ?
govt also stopped amazon flipkart from selling private labels because they only sell majority of them online and not offline. Govt wanted them to sell 75% stock offline and only 25% online like the new e-commerce policy dictates
 

Lord Nemesis

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The ecom policy completely banned private labels linked to a FDI company from selling all together by basically considering then as having indirect FDI themselves. The 25% rule is only for the other 3rd party businesses. Private labels were never expected to sell offline.

In any case govt seems to be back tracking on this after these brands lobbied hard.
 

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I have a theory on why this u-turn came. Just look at the timings of Trump meeting with Modi and a day after that this news comes out. Most probably CEO's from Amazon and Walmart had a talk with some people in US administration (and they in turn talked to the Indian delegation). Maybe the Indian side thought they could outsmart the US business's in such things but got a kick in the ass instead. Maybe they were threatened with similar retaliation in the US. What happened is not known, but the timing is too perfect. A lot of Govt officials who usually brag, remaining tight lipped adds even more to the puzzle.

A senior DIPP official refused to comment on what precipitated Thursday’s contradictory clarification, but assured that the clarification remains the final legal stand of the government, as of now, on the private label business.
 
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Lord Nemesis

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Not an ice cube's chance in hell of that happening, Trump is not the kind of person who would do something because it is good for his country. He generally does random things based on his own upside down assumptions and perceptions. But leaving that aside, Bezos is the polar opposite of everything that trump represents and Trump vehemently hates Bezzos and everything that he represents. He literally ranted about him online for years and it enrages him that Bezzos doesn't even care to take the bait and reply back to his taunts. Somebody who literally built his empire from scratch unlike Trump and completely immune to his taunts and rants.

Trump went so far as to abuse his presidential powers to make things difficult for Amazon in US. One example is asking USPS to charge Amazon at double rate and even suggested that Amazon should be made to fund the entire budget of USPS. You think there could even be any kind of dialog between the two. Not a chance.

More than likely, Its just Aamzon and Flipkart lobbying hard, meaning large amounts of money involved. This is election year after all.
 
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blr_p

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I have a theory on why this u-turn came. Just look at the timings of Trump meeting with Modi and a day after that this news comes out. Most probably CEO's from Amazon and Walmart had a talk with some people in US administration (and they in turn talked to the Indian delegation). Maybe the Indian side thought they could outsmart the US business's in such things but got a kick in the ass instead. Maybe they were threatened with similar retaliation in the US. What happened is not known, but the timing is too perfect. A lot of Govt officials who usually brag, remaining tight lipped adds even more to the puzzle.
I was thinking this could be a pre-emptive move in this regard against the US. But i think the domestic lobby argument is stronger. This policy isn't completely formed they are making it up as they go along.[DOUBLEPOST=1546775065][/DOUBLEPOST]
govt also stopped amazon flipkart from selling private labels because they only sell majority of them online and not offline. Govt wanted them to sell 75% stock offline and only 25% online like the new e-commerce policy dictates
So ? and what about other labels.

The article makes it sound like its a complete U-turn.

Is that true ?
 

Lord Nemesis

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Its already known last year itself that Reliance is venturing into e-com space which is why I said that this regulation is a preparatory ground work to put the competition at a severe disadvantage by the time reliance enters so that they can immediately capture the market. Kind of like how JIO was allowed to give free services in the name of testing their network while the competition would be penalized for doing something like that. Also, the nitty gritty in the regulations didn't at all look like the work of offline retail lobby at all and nor was it handiwork of govt bureaucrats. It literally looked like it was drafted by reliance legal team. The 25% rule in particular. This is to ensure that Amazon and Flipkart can't have any exclusive sellers on their platforms to give them an edge. They are also trying to kill all other advantages like free shipping, priority shipping etc.
 
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Mr.J

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How the hell is 25% rule is enforced? As a customer, my shopping is like 80% online cause I prefer that. And I'm sure there are many others like me. What are non-Reliance entities are supposed to do in this case? Keep 75% of their stock spread in outlets and malls or something?
 
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yashvisent

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Well just like I had mentioned in my earlier post.

Now it almost proves that the PM is on the pay-roll of Mota-Bhai.
 
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Lord Nemesis

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How the hell is 25% rule is enforced? As a customer, my shopping is like 80% online cause I prefer that. And I'm sure there are many others like me. What are non-Reliance entities are supposed to do in this case? Keep 75% of their stock spread in outlets and malls or something?
I have not gone into details, but I think the 25% rule is also to prevent exclusive selling on FDI based market places. Even if its not specified like that now, they will change it later. So, 25% in Amazon, 25% in Flipkart and 50% on Reliance if not in offline retail. There is no need to sell offline.

There are many small scale sellers who operate on one single platform to keep things simple and optimal. They don't have the logistics to be on multiple platforms, let alone operate offline. So, if the 25% rule is only for FDI marketplaces or made so in future, they can technically push many sellers towards Reliance.

The Ambani family has a proven track record of using political clout for disruptive tactics. In the present scenario, They literally can't survive Amazon without using every bit of his clout to extract every ounce of unfair advantage.
 
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6pack

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Amazon is buying MORE retail chain now along with some Indian company to ger a foot in brick and mortar land. Motabhai forgot American dollars have more value than Indian Rupee. lol.
 
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Mr.J

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In India, laws have more value than Dollars and motabhai have lawmakers in his pockets.
 
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6pack

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In India, laws have more value than Dollars and motabhai have lawmakers in his pockets.
laws don't have any value. in this thread itself, the law was changed drastically in just 2 weeks or so according to the amount of money falling into politicians laps. bezos can buy out more indian politicians than motabhai if he feels like it.
 

adder

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laws don't have any value. in this thread itself, the law was changed drastically in just 2 weeks or so according to the amount of money falling into politicians laps. bezos can buy out more indian politicians than motabhai if he feels like it.
No idea how much motabhai is worth but Bezo is going to be poorer by as much as 50% after is divorce is finalized.