The recent changes in FDI policy for the e-commerce sector send a wrong message to investors and lack transparency, the head of an influential US lobby has war ned. “Current policy revisions short-changes the customer. The message we are sending is that the customer is not the king. Also, the process lacked transparency, and predictability. It sends a wrong message to the investor community,” Mukesh Aghi, president and CEO of the US-India Strategic Partnership Forum, told TOI.
In a sudden move, the government modified existing foreign investment rules in the e-commerce sector by barring players such as Amazon and Flipkart from selling products from companies in which they have a stake. The tightened guidelines, which are expected to have a major impact on top ecommerce firms in the country, also barred them from selling exclusive products on their platforms.
“Multinational companies will be hesitant to go to their board to seek approval for further investment. When you change the rules of the game while the first investment is still being implemented, on what basis a CEO can justify further investment if you do not have a predictable regulatory environment?” Aghi said. “This will have a wide and long-term impact. We are currently on a campaign to convince US companies which are manufacturing in China to move their base to India. How do we assure them that regulatory policy will be consistent and predictable? These sudden changes do have an impact on investor confidence in India,” he added.
The rule changes have shocked top global retailers, but domestic firms have welcomed them, saying it ushers in a level-playing field.
Aghi called for a dialogue with various stakeholders to ensure that sudden changes in policy do not catch investors off guard. “We should take emotions out of the whole process and have a dialogue which looks into the interest of the customer, local kirana stores and local regulatory environment,” Aghi said.
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