| Subject: |
Australia, New Zealand back Japan's regional trade pact to bat for FDI in e-commerce in India |
|
NEW DELHI: Australia and New Zealand have joined Japan in trying to persuade India to open up its rapidly growing ecommerce sector, forecast to reach $300 billion by 2030, to overseas investment. Both countries have backed Japan's proposal to include e-commerce in the 16-nation regional trade pact that's being negotiated.
India is opposed to this for various reasons. Among them is the need to ensure that homegrown online retailers are protected. On the other hand, e-commerce companies have sought to get around the restriction on overseas capital by turning themselves into marketplaces that connect vendors with buyers. That's led to protests by brickand-mortar retailers, which say they're facing stiff curbs on taking foreign money. Companies such as Ebay and Amazon have meanwhile been lobbying the Indian government to open up e-commerce to foreign investment.
India will face strong pressure in this regard during June 8-13 talks in Kyoto. Member countries aim to conclude the Regional Cooperation and Economic Partnership (RCEP) by the year end.
"We firmly back Japan's proposal for a separate chapter on e-commerce," said an Australian government official who didn't want to be named. "India is a growing economy and e-commerce is proving to be its strength. We are not expecting a very ambitious deal on e-commerce at the moment but let us have a chapter that could be scaled up over the years."
There is rising global interest in India's e-commerce market that Goldman Sachs says will grow 15-fold from the current $20 billion to $300 billion. It cited "hyper growth in affordable smartphones, improving infrastructure, and a propensity to transact online" as key drivers.
India does not allow foreign direct investment (FDI) in the business-to-consumer (B2C) segment but 100 per cent FDI is allowed in business-to-business (B2B) transactions, marking the difference in rules for retail and wholesale. It allows 49 per cent FDI in multibrand retail but with restrictions.
The government has come under pressure to spell out its policy on the e-commerce sector in light of the stance of brick-and-mortar retailers. The latter filed a case in the Delhi High Court on the matter, following which the government was asked to resolve the issue in four months. Japan had in February floated a discussion paper to include e-commerce as a separate chapter in the RCEP negotiations. India is not in favour of this.
"We have to keep the national interest in mind. We are yet to have an e-commerce policy of our own to sign a deal at the regional level," said an Indian government official. The bloc includes 10 Asean countries and the six partners with which they have free trade agreements (FTAs), including Australia, China, India, Japan, Korea and New Zealand.
The RCEP pact seeks to include goods, services, investments, competition and intellectual property.
In the previous round of negotiations in New Delhi, Japan had asked for most favored nation (MFN) status and national treatment to be accorded in the e-commerce sector. Japan has not made a distinction between B2C and B2B, the way e-commerce is regarded globally.
It has pushed for minimum barriers in e-commerce seeking harmonization of the regulatory framework.
"National treatment and MFN will mean providing foreign companies the same treatment you give to domestic players. We will not be able to subject them to FIPB (Foreign Investment Promotion Board) approval or bar FDI in B2C. Under fair and equitable treatment, the policy making space of the government gets compromised," said the Indian official.
Source : economictimes.indiatimes.com
|