New norms may freeze Flipkart, Amazon models
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rdst_1
Juggernaut
Bro you clearly don't understand FDI as well as the new rules.
Here's how cloudtail is affected -
Amazon is a company which is operating a marketplace with 100%FDI investment. According to the new rules, Amazon or any of it's group companies or any company in which Amazon has an investment can't sell on Amazon or another marketplace having 100%FDI/controlling interest of a foreign company.
So basically Cloudtail, which has investment from Amazon can't sell on Amazon/Flipkart.
Edit - Basically Amazon can't invest in any company which is a seller on Amazon as that makes Amazon itself a vendor, which was against the rules set in place when 100%FDI was allowed e-commerce.
Even IKEA would be affected I think. They had opened an online website to sell their goods along with the store in Hyd. I wonder how they're feeling now.
No wonder foreign companies don't feel like doing business here. All parties have dumb politicians passing such absurd laws now and then and doing 180 degree turns on anything according to their whims.
No wonder foreign companies don't feel like doing business here. All parties have dumb politicians passing such absurd laws now and then and doing 180 degree turns on anything according to their whims.
Amazon/Flipkart need to sell of their stake in these companies in next one month for them to be able to continue as a online/offline retailer. They also need to deal with Rs 5000 crore worth of inventory by then.
AMG
Herald
You are confusing Amazon (foreign company), Cloudtail (foreign company) and Cloudtail India (Indian company incorporated in India, headquarters and main office in India)
There is a reason why Amazon moved from cloudtail (Zero products for sale, BTW) https://www.amazon.in/s?marketplaceID=A21TJRUUN4KGV&me=A14UQ4H17XUX90&merchant=A14UQ4H17XUX90
To Cloudtail India https://www.amazon.in/s?marketplaceID=A21TJRUUN4KGV&me=AT95IG9ONZD7S&merchant=AT95IG9ONZD7S
Doesn't matter if its Cloudtail or Couldtail India. According to the new policy, If Amazon has even 0.001% of equity stake in the company, they will not be allowed to run retail business.
Just for the record, Amazon India is also an Indian company incorporated in India. This is the company operating the Amazon market place in India, They still have to comply with FDI regulations since they get investment from Amazon US.
Registering a separate local company in India is a strategy followed by many international companies. You see it all the time in IT too. For example, Microsoft Corporation India Pvt Ltd, Microsoft India (R&D) Pvt. Ltd and Microsoft Global Services Centre India Pvt. Ltd are private companies registered in India and providing IT services to Microsoft Corporation US, which is a public company.
Just for the record, Amazon India is also an Indian company incorporated in India. This is the company operating the Amazon market place in India, They still have to comply with FDI regulations since they get investment from Amazon US.
Registering a separate local company in India is a strategy followed by many international companies. You see it all the time in IT too. For example, Microsoft Corporation India Pvt Ltd, Microsoft India (R&D) Pvt. Ltd and Microsoft Global Services Centre India Pvt. Ltd are private companies registered in India and providing IT services to Microsoft Corporation US, which is a public company.
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AMG
Herald
rdst_1
Juggernaut
You are clearly failing to grasp anything we are saying. Please read our posts again.
Final try from my side -
Any seller selling on Amazon.in / Flipkart/a marketplace which has 100% FDI / a marketplace in which controlling interest is of a foreign company, can not take even Re 1 investment from the company/group of companies running the aforementioned marketplace.
So basically, no seller selling on Amazon.in can have Amazon.com or any of it's group companies (which includes Amazon Asia and Amazon India) as an investor even if it is a 0.001% share.
Edit - I'll make it even simpler.
Amazon.in was incorporated in India making it an Indian company. However, to raise money for it's operations as an e-commerce venture, they didn't partner up with an Indian company or take a loan from an Indian Bank. Instead they decided that they will take advantage of the new GoI policy which allowed an e-commerce company to raise 100% of it's money from a foreign company, Amazon.com in their case. It could have been any other foreign company as well.
The same GoI policy stipulated, that if any Indian e-commerce venture, Amazon.in in this case, decides to go for 100%FDI or even relinquish control to a foreign company, so basically anything above 51% FDI, then the said Indian incorporated but now foreign owned e-commerce venture can only function as a marketplace, i.e. it can't invest even Re 1 in any of the sellers on his portal. Hence, even if Amazon.in/Flipkart.com are companies incorporated in India, they can't invest even Re 1 with any of the sellers on their respective portals.
The law is not new. It was stipulated when the policy was formed. The govt has just decided to enforce it more sternly now and as it says in the article I posted, according to Amazon/Flipkart, it was a calculated risk that they had taken despite knowing the consequences.
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AMG
Herald
So, let's say you are Honor.
You sell 25% on FK 25% on Amazon 25% on Snapdeal and 25% on paytm/reliance Digital.
Problem solved?
blr_p
Oracle
I don't have a problem buying white goods from stores. I don't mind even paying a premium as its always better to see the item before purchasing it. Can't do that with online and in the end there is always a store with a person you can meet should there be any problems later. I bought my washing machine from a store and got a better deal couple years back that no online offer could match. They didn't even have the model i got. Which was a plain model but with the right specs.[DOUBLEPOST=1546260986][/DOUBLEPOST]
haha ok i see the angle now
All other e-commerce sites benefit from this redistribution
blr_p
Oracle
The consistent growth over a decade does not reflect that sentiment. In the end if India is to continue growing it has to be the best place to attract capital.
Energy companies like Enron got burnt in the 2000's but that's just one segment. Retail in India is set to be massive in the years ahead.
if this ruling survives in its present form its design is to keep controlling interests in the country than outside. Keeping them in country means subject to local rules that is the idea.
adventureguy
Innovator
wtf? Are you for real? Do you really think like that?
Enron was a scammy company. Good it got burnt. Indian govt got burnt even more than them. Worst was Shiv Sena govt almost sold off the Taj Mahal and put Maharashtra govt into lakhs of crores of debt the state is still trying to pay even now. That was the lowest point in Maharashtra's history imo. And stupid BJP is allies with such a mindless political party that has no inkling of doing anything other than destroy anything good in the state. Just look at the state Maharashtra is in now. Everything is the costliest and no service at all. Power, water, real estate, public transport, petrol, LPG, piped gas, taxes etc all cost higher than other states. What do people get in return? Bad governance, useless spending on highways instead of building rail networks, scams in everything, building quality that does not match the price they're sold at, etc.
Consistent growth was due to IT and steel sector only. Most of growth was software services. Probably a bit of handicrafts and other small arts stuff. India wont attract business capital if the govt does 180 degree turns and taxes companies 5 years back because of some new rule that was changed on the behest of some indian company feeling the heat in doing business. The only capital India would attract is in stock market and even that will go away once the stupid FM starts taxing it.
What do you think a foreign company will invest in India when the local rules are changed every now and then on some some persons fancy or because the party wants money from some company? This is never ending because of Indian political parties nature. Its does not make a good business environment. It just ads to complexity and rather than investing money in business and politicians, they will take it some place else where such stupidity is at a minimum and they can put more resources towards their companies growth than play political games. I will never invest in India if I was a foreign company. Its just not worth it. Huge waste of time and money when monkeys are at the helm.
Retail will fall flat or plateau out in coming years. There are too many sellers in India already. Too many middlemen. Already job creation is slowing down. What will people buy when they don't earn. Most of the country does not earn more than 30k a month. Trying to judge retail only looking at cities is a bad idea. Rules like these that put a spanner in growth. Most people will be buying from local shops near them and not online. No one will spend extra money on shipping when they get stuff a few feet away from their houses.[DOUBLEPOST=1546322355][/DOUBLEPOST]
I read some where they were planning to sell online in coming months. They were looking for warehouses in and around Mumbai and in North India (Gurugraham? I think) to set up delivery centers.
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adventureguy
Innovator
They do have plans to come online eventually but for this year, they're just focused on setting up physical stores at bangalore, and mumbai. Atleast this is what ikea manager at hyd told me.
blr_p
Oracle
I go by what analysts tell me and Enron and other companies that tried to get into the energy sector got burnt.
Your state had three terms of NCP. Time for a change. Hell yes. Any state that has to put up with the same admin as long desperately needs a change.
Look at the votes Shiv Sena got, reduced in their own stronghold to the point they consider their ally an opponent.
India attracted $61 bn in FDI this year alone. That figure has been on the rise year on year since 2014 thanks to Modi. When it comes to foreign economic policy this govt has been brilliant. That's why growth has been up throughout.
The trips abroad by PM, President, Vice & foreign minister all in concert to hard sell the country to the world have paid off. They have set a precedent now that has to be continued.
Indian economy is 19% agriculture, 20% manufacturing and the rest is services. In services IT makes up 5%, the rest is all SME's. Those SME's are India Inc. From the flower seller, on to retail, hotels, shops. A lot of growth is consumption driven.
This happened with the last UPA, where they decided to retroactively tax companies. Has this happened with this govt ? no
We are a huge growing market. That is why the govt is bold enough to make rules like this. Where else are investors going to go ? China ?
Ease of doing business jumped thirty places in the last fur years. We are set to surpass France in terms of GDP to become 5th largest economy in nominal terms.
Yeah, i think foreign companies will want to continue coming here.
Come back in a month and tell me whether these rules remain in their current form or have been amended. Still one month of haggling left. If they are in place and this govt gets another term let's see how long they remain in their present form. Timing of their implementation makes me suspect this is an election ploy.
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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.
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.
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.
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.
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