India’s government announced Thursday that it is relaxing foreign investment rules to permit e-commerce companies to purchase products directly from Indian sellers and then resell those goods to customers in other countries — a significant victory for Amazon, which spent months lobbying for the policy change.
The longstanding restrictions on companies like Amazon and Walmart have been a source of tension between New Delhi and Washington for years. The timing of the relaxation is notable, as it arrives while India and the United States are still working to finalize a trade deal, even though officials from both countries have indicated that negotiations are close to being wrapped up.
India originally put these rules in place to shield its traditional brick-and-mortar retailers. Under the old policy, foreign e-commerce companies were not allowed to sell goods directly to consumers — whether domestic or international — and were limited to running online marketplaces that connected buyers and sellers in exchange for a fee. The government said that restriction has now been lifted specifically to help grow India’s export market.
In an official statement, the Indian government said the decision was made to “facilitate greater exports through easier and increased access of global markets.”
Neither Amazon nor Walmart’s Indian e-commerce subsidiary, Flipkart, responded to requests for comment.
The rule change comes despite pushback from small retailer advocacy groups, which had argued against easing restrictions on the U.S. companies during private meetings with government officials last year. The Confederation of All India Traders, which represents millions of traditional retailers, has warned that the change could be exploited by foreign corporations to gain greater control over supply chains.
The decision also comes against a backdrop of legal scrutiny. India’s antitrust watchdog concluded in 2024 that Amazon had violated competition laws through deep discounting practices and by favoring certain sellers on its platform — allegations that Amazon has denied.
