Foreign investment rules on ecommerce in India saw an amendment, putting several restrictions on foreign-funded online platforms. The recent changes have prompted ecommerce giants Flipkart and Amazon to tune up their team for government affairs and public policy.
An ET report stated that Walmart-owned Flipkart has hired Dhiraj Kapur, former VP of corporate affairs at Carlsberg India. He has been assigned as the head of government affairs and will be a key to the company’s understanding of the government’s policies. Dhiraj is putting a team together which will constitute members from several states, reporting to Rajnees Kumar, the chief of corporate affairs at Flipkart.
Flipkart is likely to hire retired IAS and IPS officers as experts to advise it on the government’s policies and affairs. The Bengaluru-based company is also said to have been working with stakeholders across the country to create a shared value of the business.
“To continue creating value for these different stakeholders, including communities, we work with industry associations, farmers and FPOs, other partners, governments and public authorities at the central and state levels,” Kumar said in an emailed response, as reported by ET.
Kumar also said that consistent engagement helps the company to bring in best practices for operation. As a homegrown company, Flipkart, he said, always tries to use technology and innovation-driven approach to support its stakeholders, also including public authorities to execute their vision of growth better.
Flipkart’s rival Amazon is also planning to hire experts for three managerial posts on public policy and government affairs. According to ET, a senior executive of foreign digital economy said that the aggressive hiring in these sectors come as a consequence of the new FDI policies.
The new FDI policies came into effect starting February. The new guidelines direct ecommerce marketplaces to not sell products where they own a stake. Now, ecommerce marketplaces can only have B2B relation with their sellers — they cannot exercise any control over their inventory. The new guidelines also ask ecommerce platform to not have exclusive selling rights on their platforms.
Post implementation of the new rules, Walmart and Amazon together lost $50 Bn in market capitalisation. Amazon India also removed product listings from its preferred sellers such as Appario Retail and Cloudtail to comply with the ruling.
The new guidelines were put to criticism by Flipkart’s co-founder Binny Bansal. He reportedly said that these regulations adversely affect small startups and early-stage companies.
It was also reported that the Indian ecommerce sector might suffer a loss of $45.2 Bn in sales by 2022 after the new FDI rules had come into effect. Reuters had reported that a study by PricewaterhouseCoopers (PwC) projected that the companies might be severely affected if they change their business model plans.