Walmart Inc.'s Indian subsidiary, Flipkart Group, faces a new round of regulations aimed at putting restraints on e-commerce businesses in that country.
India's consumer affairs ministry released proposed rules Monday that would affect Flipkart, Amazon.com, and other companies vying for a piece of India's e-commerce market.
If enacted, though, the rules would apply to both Indian and foreign companies.
Companies that would be affected by the proposed regulations have until July 6 to weigh in on them. The government may then choose to review the proposals further or adopt them.
The ministry's proposals include barring companies from selling or promoting their private-label brands; ensuring companies' search parameters don't discriminate against domestic goods and sellers; creating a system to address grievances; identifying imported goods with a country-of-origin label; limiting online "flash sales"; and appointing a chief compliance officer.
Walmart did not immediately respond to requests for comment.
International retail expert Dave Marcotte said every foreign company trying to do business in India has to navigate a complex regulatory system designed to give its largely mom-and-pop retailers every advantage.
"You have to find some way of working with the government," said Marcotte, senior vice president of retail insights for Kantar Consulting.
The new rules are actually amendments to consumer protection regulations that took effect last year, the consumer affairs ministry said in its news release.
Over the past year, the ministry said, the government has heard complaints from "aggrieved consumers, traders and associations" alleging widespread cheating and unfair trade practices among e-commerce businesses.
Reuters reported Thursday that an internal email it obtained from the U.S.-India Business Council, a lobbying group that is part of the U.S. Chamber of Commerce, said the proposals include "several concerning policies" that "will result in a more stringent e-commerce regime."
A Business Council spokeswoman said the organization had no comment on the matter.
The issues addressed in the consumer affairs ministry's proposed amendments mirror allegations made in another government agency's ongoing investigation into the businesses practices of Walmart and Amazon.
The Competition Commission of India opened the inquiry in January 2020. The commission's order said the investigation would focus on claims that the companies gave preferential treatment, such as prominent listing in search results, to select sellers.
"These preferred sellers are also alleged to be affiliated with or controlled by Flipkart or Amazon either directly or indirectly," the order said.
Earlier this month, an Indian court rejected petitions by Flipkart and Amazon seeking an end to the investigation.
Walmart acquired a 77% stake in Flipkart, India's largest homegrown e-commerce platform, in August 2018. The Bentonville-based retailer invested $16 billion in Flipkart in its largest deal to date.
Walmart India operates 29 wholesale stores that sell to other businesses. But because India prohibits foreign companies from selling directly to consumers, Walmart bought Flipkart to tap into India's e-commerce market, which investment firm Morgan Stanley expects to be worth about $200 billion by 2027.
The acquisition hit a roadblock almost right away when the Indian government passed a mandate in February 2019 enforcing India's protectionist restrictions on foreign companies.
A provision of India's Commerce and Industry Ministry's mandate prohibited retailers outside the country from selling their own products, or those of companies they own, on their Indian e-commerce sites.
These retailers also could not enter into exclusive contracts with third-party sellers.
Walmart vowed to comply with the new rules and remain committed to doing business in India.