New Delhi: Jeff Bezos, meet Mukesh Ambani.
It’s time the Amazon.com Inc. boss took notice of his real rival in India, the only billion-strong consumer market open to Western tech firms. While Walmart Inc.’s acquisition this year of Flipkart Online Services Pvt. Ltd, a homegrown e-tailer, might have given the impression that the battle for India would be an all-American contest, a new national e-commerce policy doing the rounds in New Delhi should disabuse Bezos of that notion.
If the draft e-commerce policy becomes law, the oil-to-telecom tycoon who’s India’s richest man will emerge as the most formidable challenger to the wealthiest person on the planet.
The core contest comes down to warehouses. Foreign-funded firms aren’t allowed to hold e-commerce inventory in India. That’s a disadvantage for Amazon, since it prevents the firm from fully capitalizing on the strengths of its vaunted logistics operation, seen as one of its most decisive edges in the US.
Amazon was hoping that those rules would be loosened, but the proposed e-commerce policy instead calls for harsh controls on even the phantom sellers that Amazon and Flipkart have been using to get around the no-inventory problem. If the new policy is strictly implemented, Amazon, and its preferred resellers, won’t be able to offer deep discounts.
Meanwhile, Indian-managed companies like Ambani’s Reliance Retail Ltd will be free to control and improve their supply chains while building a fearsome online presence in partnership with his mobile operator, Reliance Jio Infocomm Ltd.
That’s not the only onerous aspect of the policy. The draft speaks of a two-year period after which data generated in India—on social media (Facebook Inc.), via search engines (Alphabet Inc.’s Google), or e-commerce (Amazon)—will have to be stored on local servers. As the Wall Street Journal noted this week, the move is bound to push up costs for Western firms.
This new restriction will probably make it to the final law. The Indian central bank is already directing all payment firms like Visa Inc., Mastercard Inc. and PayPal Holdings Inc. to keep their Indian data exclusively in the country by October, so there’s little reason to expect that rules for e-commerce data will be much less stringent.
Besides, similar laws already exist in China. Amazon sold its Chinese servers and some other cloud assets to a local partner to comply with Beijing’s local storage rules. Alphabet, which has no data centers in China, is also looking for a local partner to bring its Google Drive and Google Docs to that country, Bloomberg News reported recently.
Other aspects of the e-commerce policy may die without Bezos needing to move a muscle. Indian privacy activists will balk at the idea of a “social credit database,” to be set up—in a very Chinese fashion—by mixing state and non-state citizen data. While the goal of the database is to promote digital lending, there’s no guarantee it won’t be used to stifle dissent.
A more problematic suggestion in the draft is that the Indian government would have access to the data stored in India, “subject to rules related to privacy, consent etc”. A proposed Indian data-privacy law is yet to be passed by parliament, and whatever makes it onto the books will in turn be shaped by the Indian apex court’s verdict in a case challenging the constitutional validity of a biometric identification system that the government has rolled out to 1.2 billion Indians.