NEW DELHI— Hoping to match China’s success at protecting and promoting homegrown tech titans, India has plans to continue tightening restrictions on Amazon.com Inc . AMZN 2.89% , Walmart Inc. WMT 1.09% Facebook Inc. and other foreign firms that have come to dominate the country’s budding internet economy.
As hundreds of millions of people get online for the first time, and with national elections due in the coming months, Indian policy makers are upping the pressure on American rivals and changing policies to favor domestic players.
The secretary of India’s Telecommunications Department, Aruna Sundararajan, last week told a gathering of Indian startups in a closed-door meeting in the tech hub of Bangalore that the government will introduce a “national champion” policy “very soon” to encourage the rise of Indian companies, according to a person familiar with the matter. She said Indian policy makers had noted the success of China’s internet giants, Alibaba Group Holding Ltd. and Tencent Holdings Ltd. , the person said. She didn’t immediately respond to a request for more details on the program or its timing.
At stake is what many think is the world’s most promising and largely untapped digital market.
Some Indian corporate leaders have been ratcheting up the rhetoric in recent months. It is a tough time to start a trade debate as India is headed toward national elections before May and few politicians or policy makers are likely willing to side with big foreign firms, observers say.
Mukesh Ambani--India’s richest man and the brain behind an affordable national 4G network that he is leveraging to claw out some market share in everything from video to e-commerce—invoked Mahatma Gandhi at a business conference this month and called for the end of “data colonization” by foreign firms.
The blowback comes on the back of great success and huge investment by American companies. Amazon has skyrocketed to become the country’s top online retailer in recent years and is investing $5 billion. Walmart last year acquired Flipkart, India’s biggest domestic online shopping firm, for $16 billion, its largest acquisition ever.
Tensions began rising last year, when New Delhi decided to create a clearer set of rules for e-commerce and convened a group of local players to solicit suggestions. Amazon and Flipkart, even though they make up more than half the market, weren’t invited, according to people familiar with the matter. They were told they could provide suggestions later.
The draft policy that was hammered out last fall with input from Mr. Ambani’s Reliance Jio, along with local players, had a decidedly protectionist tone.
India’s policies should be aimed at “encouraging domestic innovation and boosting the domestic digital economy to find its rightful place with dominant and potentially noncompetitive global players,” the draft said.
A day after Christmas and before Amazon, Walmart and Flipkart had a chance to chime in, the government announced a new policy, demanding significant reworking of the industry before Feb. 1. The foreign firms must now rewire their supply chains and stop using some of the tactics they used to compete, such as exclusive agreements with manufacturers and deep discounts.
They have been lobbying policy makers across New Delhi this year and sending letters to formally complain, asking for more time and discussion. They say it could take several months to comply. But so far policy makers haven't budged, says a person familiar with the companies’ actions.
Kunal Bahl, chief executive of Snapdeal, one of India’s leading local e-commerce firms, in a letter last week that was reviewed by The Wall Street Journal praised the moves to “plug the glaring loopholes” that other companies have exploited. He urged the adoption of new policies “without delay,” noting they would help small businesses, which have been wrongly crowded out of online marketplaces by other players’ subsidiaries.
The Confederation of All India Traders, a body that says it represents about 70 million online and offline domestic sellers, has warned the government of a political backlash if New Delhi submits to pressure from American interests and delays implementation of the policy.
The group “will launch a nationwide protest if this happens and may vote against the government in 2019 elections,” said Praveen Khandelwal, the Confederation’s general secretary.
Separately, India’s telecommunications regulator is soliciting feedback on new rules that could force Facebook’s WhatsApp and others to let authorities read encrypted messages between users on national-security grounds. That could threaten the service’s growth in India and undermine its global reputation as a secure service, should it comply.
“It’s about time,” the government started taking action to protect Indian startups, said Kavin Bharti Mittal, founder of Hike, India’s biggest local messaging app and a rival to WhatsApp. If India’s tech industry is overrun by American firms, it can never truly flourish, he said.
As hundreds of millions of people get online for the first time, and with national elections due in the coming months, Indian policy makers are upping the pressure on American rivals and changing policies to favor domestic players.
The secretary of India’s Telecommunications Department, Aruna Sundararajan, last week told a gathering of Indian startups in a closed-door meeting in the tech hub of Bangalore that the government will introduce a “national champion” policy “very soon” to encourage the rise of Indian companies, according to a person familiar with the matter. She said Indian policy makers had noted the success of China’s internet giants, Alibaba Group Holding Ltd. and Tencent Holdings Ltd. , the person said. She didn’t immediately respond to a request for more details on the program or its timing.
At stake is what many think is the world’s most promising and largely untapped digital market.
Some Indian corporate leaders have been ratcheting up the rhetoric in recent months. It is a tough time to start a trade debate as India is headed toward national elections before May and few politicians or policy makers are likely willing to side with big foreign firms, observers say.
Mukesh Ambani--India’s richest man and the brain behind an affordable national 4G network that he is leveraging to claw out some market share in everything from video to e-commerce—invoked Mahatma Gandhi at a business conference this month and called for the end of “data colonization” by foreign firms.
The blowback comes on the back of great success and huge investment by American companies. Amazon has skyrocketed to become the country’s top online retailer in recent years and is investing $5 billion. Walmart last year acquired Flipkart, India’s biggest domestic online shopping firm, for $16 billion, its largest acquisition ever.
Tensions began rising last year, when New Delhi decided to create a clearer set of rules for e-commerce and convened a group of local players to solicit suggestions. Amazon and Flipkart, even though they make up more than half the market, weren’t invited, according to people familiar with the matter. They were told they could provide suggestions later.
The draft policy that was hammered out last fall with input from Mr. Ambani’s Reliance Jio, along with local players, had a decidedly protectionist tone.
India’s policies should be aimed at “encouraging domestic innovation and boosting the domestic digital economy to find its rightful place with dominant and potentially noncompetitive global players,” the draft said.
A day after Christmas and before Amazon, Walmart and Flipkart had a chance to chime in, the government announced a new policy, demanding significant reworking of the industry before Feb. 1. The foreign firms must now rewire their supply chains and stop using some of the tactics they used to compete, such as exclusive agreements with manufacturers and deep discounts.
They have been lobbying policy makers across New Delhi this year and sending letters to formally complain, asking for more time and discussion. They say it could take several months to comply. But so far policy makers haven't budged, says a person familiar with the companies’ actions.
Kunal Bahl, chief executive of Snapdeal, one of India’s leading local e-commerce firms, in a letter last week that was reviewed by The Wall Street Journal praised the moves to “plug the glaring loopholes” that other companies have exploited. He urged the adoption of new policies “without delay,” noting they would help small businesses, which have been wrongly crowded out of online marketplaces by other players’ subsidiaries.
The Confederation of All India Traders, a body that says it represents about 70 million online and offline domestic sellers, has warned the government of a political backlash if New Delhi submits to pressure from American interests and delays implementation of the policy.
The group “will launch a nationwide protest if this happens and may vote against the government in 2019 elections,” said Praveen Khandelwal, the Confederation’s general secretary.
Separately, India’s telecommunications regulator is soliciting feedback on new rules that could force Facebook’s WhatsApp and others to let authorities read encrypted messages between users on national-security grounds. That could threaten the service’s growth in India and undermine its global reputation as a secure service, should it comply.
“It’s about time,” the government started taking action to protect Indian startups, said Kavin Bharti Mittal, founder of Hike, India’s biggest local messaging app and a rival to WhatsApp. If India’s tech industry is overrun by American firms, it can never truly flourish, he said.
