Modi will not let Amazon Crush Indian retailers, for the moment

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Indian Prime Minister Narendra Modi wants to crush Amazon before crushing the mother and pop stores of his country. At least until the end of the next election, it is.

Amazon is growing and becoming powerful. But some governments are already bigger and more powerful than any individual enterprise, and the means to spoil Amazon's ambitions to conquer the world – that is, to dominate global e-commerce, thus crushing the mother stores and pops.

This is the case in India, where the government has recently put in place a number of regulations aimed at slowing retailer growth. Like a regulation that prohibits foreign retailers from maintaining their inventory and selling it directly to customers.

Then there is the settlement which prohibits foreign retailers from selling goods through local subsidiaries – a means by which foreign retailers attempted to circumvent the first regulation.

These regulations are certainly good news for online retailers and small Indian warehouse owners. But that's bad news for Amazon. They forced the company to remove thousands of items from its site last week, according to a Reuters report.

This is something that should worry Amazon investors. The e-commerce giant has already warned investors of the impact of new Indian regulations on its future earnings and earnings growth.

"The new Indian rules certainly make it difficult for Amazon to build on the second largest consumer market in the world for its global growth," said Haris Anwar, senior badyst at the Global Financial Platform.& nbsp;Investing.com. "After its failure in China, India had become a key market for Amazon, but now it must understand how to manage the complex rules of the subcontinent and justify its huge investment in this country. "

Jeff Yastine, senior equity and equity badyst at Banyan Hill Publishing, is not concerned. "My message to Amazon investors is to be patient," he says. Yastine considers that the recent regulations are part of the administration of Modi to get the vote of family traders in the next elections. "The rules of e-commerce are a political tool aimed at gaining the favor of the Indian legion of family traders and helping Modi and his government win the next elections and stay in power."

This is the safe route for Modi in today's environment, according to Yastine. "The unemployment rate has reached its highest level in 45 years (as a result of two major political events – the withdrawal by the government of the huge Indian investment" cash economy, "and the first ever unified tax code), the Modi government is making the safest decision possible to maintain its power, "he added.

The battle between foreign retail giants and local "mom and pop" stores is neither new nor unique in India. "It is important to remember that, while e-commerce is growing rapidly, the retail sector in India today still resembles much of the retail market in the United States in the early 1900s, where Ineffective small businesses "mom and pop" stores dominate and represent a powerful block of voters and well-entrenched interests, "says Yastine.

Yet, Yastine does not expect foreign retail regulations to last beyond elections. "The Indian retail sector is ripe for the disruption of the big retailers, but the Modi government will have to slow down at least until the fast-growing Indian economy absorbs more hand-in-hand. unemployed, "he said. & Nbsp; badured elections (and by no means guaranteed), I have no doubt that Modi will enact legislation that will leave large retailers the free hand they need, with a rapid restructuring of the Indian retail sector to follow. "

In a nutshell, Indian stores that sell a lot of time to Indian moms are only saving time before being crushed by retail giants, as was the case in America and elsewhere.

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Indian Prime Minister Narendra Modi wants to crush Amazon before crushing the mother and pop stores of his country. At least until the end of the next election, it is.

Amazon is growing and becoming powerful. But some governments are already bigger and more powerful than any individual enterprise, and the means to spoil Amazon's ambitions to conquer the world – that is, to dominate global e-commerce, thus crushing the mother stores and pops.

This is the case in India, where the government has recently put in place a number of regulations aimed at slowing retailer growth. Like a regulation that prohibits foreign retailers from maintaining their inventory and selling it directly to customers.

Next is the regulation that prohibits foreign retailers from selling goods through local subsidiaries – a means by which foreign retailers have attempted to circumvent the first regulation.

These regulations are certainly good news for online retailers and small Indian warehouse owners. But that's bad news for Amazon. According to information from Reuters, they forced the company to remove thousands of items from its site last week.

This is something that should worry Amazon investors. The e-commerce giant has already warned investors of the impact of new Indian regulations on its future earnings and earnings growth.

"The new Indian rules certainly make it difficult for Amazon to build on the second largest consumer market in the world for its global growth," said Haris Anwar, senior badyst at the Global Financial Platform. Investing.com. "After its failure in China, India had become a key market for Amazon, but now it must understand how to manage the complex rules of the subcontinent and justify its huge investment in this country. "

Jeff Yastine, Senior Equity Analyst at Banyan Hill Publishing, is not concerned. "My message to Amazon investors is to be patient," he says. Yastine considers that the recent regulations are part of the administration of Modi to get the vote of family traders in the next elections. "The rules of e-commerce are a political tool aimed at gaining the favor of the Indian legion of family traders and helping Modi and his government win the next elections and stay in power."

This is the safe route for Modi in today's environment, according to Yastine. "The unemployment rate having reached its highest level in 45 years (result of 2 major political events: the government's removal of the great" monetary economy "of India and a unified tax code for the first time), the Modi government is taking the safest way possible to maintain its economy. hold on to power, "he adds.

The battle between foreign retail giants and local "mom and pop" stores is neither new nor unique in India. "It is important to remember that while e-commerce is growing rapidly, the retail sector in India still resembles today's US retail market in the early 1900s, where ineffective small "mom and pop" stores dominate and represent a powerful block of voters and well-entrenched interests, "says Yastine.

Yet, Yastine does not expect foreign retail regulations to last beyond elections. "The Indian retail sector is poised to be disrupted by the big retailers, but the Modi government will have to slow down at least until the fast-growing Indian economy absorbs more labor." unemployed, "he said. "Assuming that Modi retains his power in power (and in any case, it is guaranteed), I have no doubt that Modi will enact legislation that will give large retailers the leeway they need, with a rapid restructuring of the sector. of retail sale in India. "

In a nutshell, Indian stores that sell a lot of time to Indian moms are only saving time before being crushed by retail giants, as was the case in America and elsewhere.