An industry desperately looking for clarity. India’s ecommerce industry, estimated to be worth over $ 50 billion, remains enmeshed in regulatory flux. With the final word yet to be said on the National Ecommerce Policy, separate guidelines have been drafted by different ministries on issues such as consumer protection and data privacy confounding an industry in search of regulatory clarity.Hopes of a stable policy framework had gained ground in June, when commerce minister Piyush Goyal said India would have a comprehensive ecommerce policy within a year.This followed months of upheaval triggered by new rules specifying that FDI-funded marketplaces could only lend their platforms to third-party sellers and barred such entities from holding any stocks or selling their own goods directly to customers. Morgan Stanley estimated the regulations would drive up business costs and uncertainty, including for industry leaders Amazon and Walmart-owned Flipkart. So much so, that its estimate of when India’s ecommerce would touch $200 billion was pushed forward by a year to 2027.Now, as Ministry for Electronics, Telecom and IT drafts rules that will govern non-personal data, and norms for consumer protection are drawn up by a separate ministry, online commerce could be left to battle on multiple fronts.
NEW DELHI: The DPIIT is working actively on the e-commerce as well as new industrial policies, and both are expected to be released by the end of this fiscal, a top official has said."I personally feel that both these policies will be ready by this financial year end," Department for Promotion of Industry and Internal Trade Trade (DPIIT) Secretary Guruprasad Mohapatra told PTI.He said that the department has done several round of stakeholders' meetings on both the policies.The government in February released a draft national e-commerce policy, proposing setting up a legal and technological framework for restrictions on cross-border data flow and also laid out conditions for businesses regarding collection or processing of sensitive data locally and storing it abroad.Several foreign e-commerce firms have raised concerns over some points in the draft pertaining to data.The department has received huge response on the draft and it is examining all the views and comments."We are working actively on both the policies," Mohapatra said.As the draft policy includes several provisions related to data, the department is also looking at the Personal Data Protection Bill approved by the Cabinet earlier this month.The proposed new industrial policy is aimed at promoting emerging sectors, reducing regulatory hurdles and making India a manufacturing hub.This will be the third industrial policy after the first in 1956 and the second in 1991. It will replace the industrial policy of 1991 which was prepared in the backdrop of the balance of payment crisis.The DPIIT had initiated the process of formulation of a new industrial policy in May 2017. The new policy will subsume the National Manufacturing Policy (NMP).It had also floated a discussion paper on the policy with an aim to create jobs in next two decades, promote foreign technology transfer and attract USD 100 billion foreign direct investment (FDI) annually.
New Delhi, With more and more Indians taking the online route to fulfill their shopping needs, e-tailers like Amazon and Flipkart are witnessing high demands, including from far-flung and remote areas, but overall slowdown and negative sentiments - coupled with the new ecommerce policy and the likely entry of Reliance into the ecommerce space soon -- may spoil the 2020 party for the market leaders, say industry experts.The later part of 2019 was not all that bad for Amazon and Flipkart as festive sales brought in record revenue for both the companies.Online retailers in India recorded $3 billion (Rs 19,000 crore) worth Gross Merchandise Value (GMV) sales between September 29 and October 4, according to Bengaluru-based market research firm RedSeer Consulting. Flipkart and Amazon's combined sales held 90 per cent of the market share.A report by Forrester Research also predicted e-retailer sales to hit nearly $4.8 billion during the overall festive season.Walmart-owned Flipkart claims it has over 60 per cent market share in the Indian ecommerce market while Amazon is believed to have about 30 per cent market share.Despite facing regulatory hurdles in early 2019, Cloudtail India, which is the single-largest seller on Amazon India, reported revenue growth of 25 per cent for March 2019 quarter.Cloudtail is owned by Prione Business Services, a joint venture between Infosys founder N.R. Narayana Murthy's Catamaran Ventures and Jeff Bezos' Amazon.Catamaran, which owns 76 per cent in Cloudtail India, is now being headed by ex-Infosys CFO Ranganath Mavinakere, Murthy's all-time favourite.According to Satish Meena, Senior Forecast Analyst with Forrester, 2019's initial months were severely impacted by the new regulation fears."There has been an overall slowdown amid negative sentiments in the ecommerce sector. The sales did pick up in the festive season but overall, it has not been a great year and you will see cut in the 2019 growth forecast percentage for the Indian ecommerce industry," Meena told IANS."Profitability is still a concern for the big players. There have been investment in certain new categories but nothing much has changed this year," he added.Reliance's likely entry into the space by Diwali next year will bring in massive competition for both Amazon and Flipkart."The discount-driven approach which Reliance has mastered reflects in whatever vertical they put their money into. They will likely enter the ecommerce space with the high-potential grocery segment near Diwali next year or may be later. Timeline is still a concern but they are coming big," said Meena.Reliance Retail's entry into the online retail sector is the biggest challenge for Amazon and Walmart-Flipkart as the Mukesh Ambani-led behemoth is well positioned to create massive disruption in the market.Reliance Retail operates 10,415 stores in more than 6,600 cities and towns, with 500 million annual footfalls - giving the company the kind of scale required to swiftly launch India-based operations.Reliance Retail has already launched its food and grocery app for beta testing among its employees.According to the India Brand Equity Foundation (IBEF), propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to $200 billion by 2026.The ongoing digital transformation in the country is expected to increase India's total Internet user base to 829 million by 2021.Another big worry for Amazon and Flipkart is the new ecommerce policy that is still in the consultation stage. India has questioned Amazon's "predatory prices" and "deep discount sales"."In the year ahead, it remains to be seen what shape the new ecommerce policy based on the recommendations of various industry stakeholders takes shape," said Prabhu Ram, Head, Industry Intelligence Group (IIG), CMR."The beneficiaries of the new e-commerce policy would potentially be small and bespoke e-commerce players, who could benefit from the level-playing field that the policy aims to provide," Ram told IANS.The grocery segment is a big growth area in 2020."We have seen players like Grofers (backed by SoftBank, Tiger Global and Sequoia Capital) making inroads into the segment. Social commerce will be another big growth area in 2010. Facebook has also made investment in Meesho, a platform that enables Indian entrepreneurs to establish online businesses via social channels," said Meena."The viability of the existing and upcoming ecommerce players will be tested big time in 2020," he added.
In the late 1990s, this central Kentucky town suffered a jolt when its Fruit of the Loom textile plant closed. Thousands of jobs making underwear went to Central America, taking the community’s pride with them.Unemployment hit 28% before an unlikely savior arrived as the century was ending: a madly ambitious startup that let people buy books, movies and music through their computers.Amazon leased a Fruit of the Loom warehouse about a mile from the factory and converted it to a fulfillment center to speed its packages to Indianapolis and Nashville, Tennessee, and Columbus, Ohio. Its workers, many of them Fruit veterans, earned less than what the textile work had paid, but the digital excitement was overwhelming.Twenty years later, Amazon is one of the world’s most highly valued companies and one of the most influential. Jeff Bezos, Amazon’s founder, has accumulated a vast fortune. In Seattle, Amazon built a $4 billion urban campus, redefining a swath of the city.The outcome has been different in Campbellsville, the only sizable community in Taylor County. The county population has stalled at 25,000. Median household income has barely kept pace with inflation. Nearly one in five people in the county lives in poverty, more than in 2000.The divergent fates offer a window into what towns can give to tech behemoths over decades — and what they get in return. Campbellsville’s warehouse was among the first of what are now an estimated 477 Amazon fulfillment centers, delivery stations and other outposts around the country. That makes Campbellsville, with 11,415 inhabitants, a case study for what may happen elsewhere as Amazon continues expanding.“Amazon has had a really good business here for 20 years,” Mayor Brenda Allen said. “We’re glad they’re here,” but, she added, “I really would feel better if they would contribute to our needs.”In central Kentucky, Amazon has reaped benefits, including a type of tax break that critics label “Paying Taxes to the Boss.” In the arrangement, 5% of Amazon workers’ paychecks, ordinarily destined for the county and the state, went to Amazon itself. The company netted millions from this incentive over a decade.Although that tax break has run out, Campbellsville itself still gets no tax money from Amazon. The warehouse is just outside the town limits. The city school system, which is its own taxing authority, does get revenue from Amazon. Both the city and county school systems recently raised their tax rates because of revenue shortfalls. (The city increase had to be rescinded for procedural reasons.)No one wants Amazon to leave, though. It is Campbellsville’s largest private employer. Its online mall has given the town’s shoppers access to a paradise of goods.Less visibly, Amazon shapes the local economy, including which businesses survive and which will not be coming to town at all. It supplies small-screen entertainment every night, influences how the schools and the library use technology, and even determined the taxes everyone pays.But the relationship between Amazon and residents is facing questions as it enters middle age.“The needle has not moved in the last two decades on the quality of life in Kentucky, especially in places like Campbellsville. What does that tell you?” said Jason Bailey of the Kentucky Center for Economic Policy, a research and advocacy group.He called the state “a fiscal mess because of tax giveaways to Amazon and other companies.” Kentucky has had 20 rounds of budget cuts since 2008, he said.In 1948, a Kentucky underwear company set up an outpost in the basement of the old Campbellsville armory with five employees. This eventually became the largest single male-underwear plant in the world, with 4,200 workers.The money was good. Fruit, as it was eventually called, built the first public tennis courts and paid the city $250,000 in 1965 to expand the wastewater disposal plant. Factory executives spurred the creation of a country club and the public swimming pool.The easy times ended with the North American Free Trade Agreement, which took effect in 1994. Amazon’s arrival five years later offered a second chance. Campbellsville was more than 40 miles from the nearest interstate, but it had a modern warehouse and thousands of workers who knew how to hustle.To woo Amazon, the local fiscal court passed the payroll tax measure, which opened up the state coffers. Amazon’s workers, like other employees in the county, would pay a 1% payroll tax and a 4% state income tax. But that money went directly to Amazon as a reward for bringing in jobs.This type of tax break was first developed in Kentucky and is now widespread. Amazon’s incentives totaled $19 million over 10 years, including exemption from the state’s corporate income tax. The company said it had ultimately received “less than half” that amount, though it declined to explain the discrepancy.Arlene Dishman began working at Fruit in 1970. She said she had earned as much as $15 an hour — the equivalent of about $100 now — sewing necklines on V-neck T-shirts. “You can’t hardly turn that money down,” she said.Her starting rate at Amazon was just $7.50 an hour, but she relished creating a digital outpost in Campbellsville. “We felt responsible for a lot of the success of Amazon,” she said. “We were just so proud.” She became a trainer, worked with Bezos himself when he came to town, and was promoted to management. When the dot-com bubble burst in the early 2000s, pressure ramped up.“I worked on the third floor,” Dishman said. “No air-conditioning. I would have people on the line pass out constantly.” As a manager, she said, she was too understanding.“I had worked with these people for so many years at Fruit that when a situation came up that management was not liking, I had a tendency to take the workers’ side,” she said. She left after three years.Amazon said the money it paid in wages was an investment in Campbellsville and that it had contributed “$15 million in taxes to Taylor County” over the last 20 years. It declined to break down the numbers.Records and interviews indicate that Amazon paid about $350,000 in taxes this year to the city school system. The company paid the county $410,000 in property taxes. Good Jobs First, a group that analyzes tax benefits for corporations, thinks that is not enough.“What has Amazon really done for the community?” executive director Greg LeRoy asked. “It’s not like it’s a tech lab, diffusing intellectual property or spinning off other businesses. It’s a warehouse.” Allen, the mayor, wants more money to pay the town’s bills. “The people in Seattle are getting rich,” she said. “They don’t care what happens to the people in Campbellsville, not really.”