India, US fail to “expressly” discuss e-commerce FDI, data localisation issues

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Updated: February 14, 2019 9:56:34 PM

Data localisation, e-commerce legislation and the generalised system of preferences (GSP) were not expressly discussed during talks between the United States and India US Ambassador Kenneth Juster said.

The US on Tuesday had asked India to “consult all key stakeholders before making any such move.”

Around a week after the US reportedly threatened India of taking back zero tariffs on $5.6 billion exports following the introduction of revised FDI guidelines in e-commerce and data localisation norms, the talks held today between two countries to iron out differences failed to have a positive outcome.

“Data localisation, e-commerce legislation and the generalised system of preferences (GSP) were not expressly discussed during talks between the United States and India,” Reuters quoted US Ambassador Kenneth Juster as saying on Thursday.

The US on Tuesday had also voiced its grievance over the contentious issues of e-commerce FDI rules and data localisation asking India to “consult all key stakeholders before making any such move,” PTI reported.

“It is in India’s interest when it undertakes these new policies to reach out to all stakeholders and think very carefully about the impact on the overall business environment,” the acting principal deputy assistant secretary of the US, Thomas Vajda, told reporters.

The revised measures on FDI in e-commerce were brought into effect on February 1 following small retailers and traders’ associations concerns to create a level playing field between online and offline retailers.

The e-commerce players have been blamed of indulging into malpractices including predatory pricing, vendor exclusivity, deep discounting, funding losses etc., that have been hurting small businesses.

As the revised FDI rules for e-commerce came into effect, Amazon and Flipkart’s parent Walmart together saw $50 billion getting wiped off from their market capitalisation, IANS reported.

Consequently, Amazon shares tumbled on the Nasdaq by 5.38% to $1,626.23 per piece on Friday while NYSE-listed Walmart’s stock price ended 2.06 % lower at $93.86.

The rules have forced Amazon to take-down its key grocery service Amazon Pantry and also withdraw different products such as sunglasses and floor cleaners from its India website.

With respect to data localisation, the government had suggested the move in the draft on Information Technology Intermediaries Guidelines (Amendment) Rules, 2018, based on the recommendation of a B N Srikrishna committee.

It suggested that all personal data of Indians should have at least one copy in India and a subset of that data, labelled as critical personal data, must be stored and processed only in India. The measure is expected to increase costs for large companies to set up their data servers in India.

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