In a move that could reshape India’s booming online retail sector, the Trump administration is reportedly pressing India to grant full market access to American e-commerce giants like Amazon and Walmart-owned Flipkart. This development comes amid ongoing trade talks between the two nations, aimed at reaching a broader India-US trade agreement.
According to a report by the Financial Times, the US wants India to allow its companies unrestricted participation in the country’s $125 billion e-commerce market. The talks are said to extend beyond retail and include sectors like automobiles and food.
The US is pushing for a “level playing field” in India’s e-commerce space, where current rules limit foreign-owned platforms like Amazon and Flipkart to operate as marketplaces only.
📌 What’s the issue?
At present, India’s e-commerce policy restricts foreign players from selling their own products directly to consumers. Instead, they must act as neutral marketplaces, merely connecting third-party sellers to buyers. Meanwhile, Indian companies are allowed to manufacture, stock, and sell their own products online, giving them a competitive edge.
Washington sees this as a “non-tariff barrier” that hampers fair competition for American businesses. The US has long advocated for more open access, but Indian regulations and policy caps on foreign direct investment (FDI) in retail have consistently kept these ambitions in check.
🏛️ The Political Context
This pressure from the Trump-led government comes shortly after US Vice President JD Vance’s visit to India, during which he met with Prime Minister Narendra Modi. Both countries have reportedly finalized the Terms of Reference (TOR) for a potential trade agreement that will guide future negotiations.
In a dramatic gesture earlier this month, Trump imposed a 26% tariff on India, though it has been temporarily suspended for 90 days. Many experts believe this move is part of a larger strategy to gain leverage in trade discussions.
“Since 2006, the US has been trying to open up India’s domestic market, and has been stymied successfully ever since,” said Arvind Singhal, Chairman of Technopak Advisors, as quoted by FT.
🔍 What’s Next for Indian E-commerce?
If India gives in to US demands, it could drastically change the e-commerce playing field, allowing Amazon and Flipkart to compete directly with Indian players like Reliance Retail, Tata Neu, and others. However, such a shift could also impact small and medium-sized Indian sellers who rely on these platforms to reach customers.
The US appears to be coordinating this push alongside its e-commerce giants, hinting at a well-strategized trade blueprint. While India continues to emphasize digital sovereignty and data protection, the coming months will be crucial in determining the direction of these high-stakes negotiations.
