The Trump administration is currently negotiating with India to potentially open its $125-billion ecommerce market to American companies like Amazon and Walmart, the Financial Times reported Tuesday citing industry executives, lobbyists and US government officials. The move comes amidst ongoing discussions for a US-India trade agreement that, if unresolved, could result in a 26 per cent tariff on Indian exports to the US. 

US Vice-President JD Vance and Prime Minister Narendra Modi recently acknowledged progress in these negotiations, which are aimed at expanding bilateral cooperation in multiple sectors, including energy and defence. 

In the discussions, American ecommerce giants are lobbying to remove existing restrictions that limit their operations to only serving as online marketplaces. They are vying for a level playing field against Indian competitors like Mukesh Ambani’s Reliance group, the largest retailer in India. 

Reliance is a formidable rival, as it can produce, own, and sell goods through its platforms. The US administration views these ecommerce restrictions as ‘non-tariff barriers’, akin to limits on foreign direct investment in retail. 

The potential consequences of not reaching a trade agreement are significant. Without a resolution, a 26 per cent tariff on Indian exports to the US is anticipated, although this has been temporarily paused for 90 days by President Trump to allow for negotiations. Meanwhile, Amazon and Walmart, which owns Indian retailer Flipkart, are advocating against these barriers. 

Industry insiders have noted that the Trump administration is working closely with US ecommerce platforms during these discussions. The attempt to pressure India into opening its ecommerce sector wider for American giants like Amazon and Walmart reflects a broader pattern of economic diplomacy aimed at securing market dominance for its corporations, the report stated citing Praveen Khandelwal, secretary-general of the Confederation of All India Traders. 

Some voices in India express concern about the impact such openness could have on local businesses. While foreign investment is welcome, it must not come at the cost of distorting India’s retail ecosystem or undermining the interests of its small traders, Khandelwal added. India has a 90-million network of small traders. 

Since its entry into the Indian market in 2013, Amazon has been playing catch-up to Flipkart, trailing in daily active users. The broader US strategy to open India’s ecommerce market has been ongoing since 2006, despite numerous challenges. 
As discussions continue, the outcome remains pivotal not only for the ecommerce sector but also for broader US-India trade relations.