Tuesday, March 12, 2013

Direct to Consumer Online Sales Limitation in India

If you are an online enterprise in the United States that sells goods directly to consumers and are looking for a new market, you may need to skip India for the time being. Based on current regulations, as noted in a recent article on ZDnet, any foreign company and/or local Indian company with foreign investment that advertises goods for sale cannot sell directly to the consumer. Instead, the foreign company will need to direct users to local Indian establishments and/or other online sites that are operated by an Indian entity (without foreign investment) that sells such goods.

Although Amazon.com and possibly other organizations are working with the Indian government to change those laws, it may be a long while before there is any movement. With good reason to protect local businesses and their competitive edge, it would not make sense to allow foreign companies to sell goods directly to consumers online.

The lack of any physical presence for an online retailer results in low overhead and lower costs to be overly competitive and possibly detrimental to smaller local businesses. However, given the size of most online retailers going global, it is typical that they build large distribution centers and create many jobs overseas. So, if there are required offsets to account for the possible detriment, there may be some leverage that could make everyone happy.

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