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According to a draft analysis from PwC a global consultants firm, “the new restrictions and rules brought by the Indian government, Will affect the India e-commerce sectors, which as a result could reduce the online sales by $46 Billion by 2022.”
“Under this regulation, companies that have an equity share in the product will not be allowed to sell their items on online platforms like Amazon or Walmart acquired Flipkart, and will be encouraged to sell it on their websites or showrooms.”
These new regulations and restrictions are said to be an attempt of the government under Prime Minister Narendra Modi, to give small retailers and traders a platform to earn due to their complaints of Global Online transactions disrupting their business.
These changes will take an effect form February 1st, leading to a delay or derail in some investment plans for companies like Amazon and Flipkart, who will have to create new and complex business plans before this.
In a separate analysis conducted by PwC, a prediction has depicted that online retail sales growth, tax collections, and job creation would get affected negatively if the companies comply with the new policy.
“Since this analysis has not been made public, assumptions or conclusions about the aftermath of this policy are still unclear. By this policy, sales will still be growing but at a less robust rate than before.”
The analysis also observed that by 2022, nearly to 1.1 million jobs would get affected and also see a reduction in tax collection by $6 billion.
This new e-commerce policy is the latest flashpoint between India and USA. Alongside, Amazon has committed to invest $5.5 billion in India while Wal-Mart has also spent $16 billion last year, to acquire Flipkart and also planned to invest $500 million (approx RS 3,000 crore) to open 47 more B2B stores in India by the end of 2022.
Which could lead to significant losses, and the government has blindsided the foreign investors by this policy.