The administration of U.S. President Donald Trump is preparing to push the Indian government to provide American e-commerce giants like Amazon and Walmart with broader and more equitable access to India’s rapidly growing digital retail market, valued at approximately $125 billion, according to a report by the Financial Times.
The report, which draws on information from industry insiders, lobbyists, and U.S. government officials, highlights growing concern among American companies over regulatory hurdles that favor domestic players in India.
This demand is expected to feature prominently in the upcoming comprehensive negotiations between the United States and India, as both nations move forward in shaping a bilateral trade agreement.
These talks are aimed at enhancing economic cooperation and removing trade irritants across a broad spectrum of sectors, including e-commerce, agriculture, food processing, and the automotive industry.
The Quest for a Level Playing Field
At the heart of the issue is the perceived imbalance in regulatory frameworks governing foreign and domestic e-commerce operators in India. Currently, Amazon and Walmart (through their subsidiary Flipkart) function under stringent restrictions that limit their ability to directly sell goods to Indian consumers.
These companies are required to operate through marketplace models, which means they can only act as facilitators connecting third-party sellers to buyers, and are prohibited from holding inventory or controlling sellers’ pricing.
In contrast, Indian conglomerates such as Reliance Industries enjoy significantly more freedom.
Through Reliance Retail and its online platform JioMart, the company can directly sell products, maintain vast inventories, and integrate both digital and physical storefronts, giving it a distinct competitive edge in reaching consumers across urban and rural markets.
The Trump administration’s push seeks to remove these disparities and ensure a “level playing field,” allowing American firms to operate on equal footing with their Indian counterparts.
While the Financial Times article did not elaborate on the specific policy changes the U.S. government is advocating for, sources indicate that greater flexibility in inventory control and direct sales may be part of the discussions.
Trade Talks and Tariff Deadlines
The push for e-commerce reform comes as India and the United States are actively working toward finalizing a mutually beneficial trade agreement.
The urgency stems from a 90-day suspension of new U.S. tariffs announced by President Trump on April 9. During this window, India is seeking to reach a deal that would prevent the imposition of fresh tariffs on its exports and cement a stronger economic relationship with Washington.
Vice President JD Vance’s recent visit to India underscored the importance of these negotiations.
During his meeting with Prime Minister Narendra Modi on Monday, both sides reaffirmed their commitment to swiftly advancing the terms of the trade agreement. E-commerce, with its enormous growth potential and mounting geopolitical relevance, has emerged as a pivotal point of discussion.
American Giants Await Clarity
Both Amazon and Walmart have invested billions of dollars in India’s e-commerce sector, viewing the country as a key market for long-term growth.
However, regulatory uncertainty and sudden policy shifts, such as restrictions introduced in 2018 and 2019 on foreign direct investment (FDI) in e-commerce, have created operational challenges and dampened investor confidence.
Neither company responded to Reuters’ requests for comment on the report, but executives from both firms have previously voiced their concerns over India’s e-commerce policies at various public forums.
With trade relations between the U.S. and India reaching a critical juncture, the outcome of the ongoing negotiations could significantly impact the future trajectory of foreign participation in India’s digital retail space.
