India may be under pressure from the US to fully open its US $ 125 billion e-commerce business to US retail behemoths like Amazon and Walmart as part of a fresh effort for a “fast-paced” bilateral trade pact, the Financial Times reported.
These negotiations are part of a larger framework for a trade agreement between the United States and India that is anticipated to encompass a number of industries, including food and autos. Trump hit India with a 26 per cent duty on 2nd April; however, it has been put on hold for 90 days.
Demands for level playing fields in e-commerce are probably part of the drive from the US. Due to India’s existing legislative environment, US e-commerce companies only function as a marketplace where other vendors offer goods for buyers. For Indian competitors, who are able to produce, own, and sell the goods on their internet marketplaces, the regulations are different. While India likewise restricts foreign direct investment in retail, Washington refers to this as a “non-tariff barrier.”
This coincides with US Vice President JD Vance’s meeting with Prime Minister Narendra Modi during his trip to India. The Terms of Reference (TOR) for a possible trade agreement between the US and India have been agreed and will serve as the framework for the upcoming talks.
There are wider business ramifications to the trade dispute. Major US retail players like McMillon and Jeff Bezos are now directly competing with Mukesh Ambani as Reliance, the biggest retailer in India, is becoming a formidable local rival thanks to its expanding e-commerce platforms.
Flipkart in India is owned by Walmart, although Amazon has been growing since joining the market in 2013. But in terms of users, Amazon is behind Flipkart. According to Bank of America analysts, Flipkart had five crore daily active users in India at the end of last year, while Amazon had less than four crore.
Notably, the Walmart-backed retailer’s initial public offering (IPO) has been postponed until late 2025 or early 2026 due to “unfavourable market conditions” in India. Flipkart has relocated its headquarters from Singapore to India in order to take advantage of further tax advantages. However, the Bureau of Indian Standards’ harsh crackdown on US retailers’ warehouses for having non-certified products is not the only issue they face; they also face restricted market access.
India’s biggest trading partner is still the United States, and both nations have indicated a desire to double its bilateral commerce in products and services to US $ 500 billion.
