Letter to Barack Obama, President of the United States - E-Commerce in India

Letter

Dear Mr. President:

We write to request your attention, during your upcoming trip to India, to the restrictions on foreign direct investment (FDI) in e-commerce. Specifically, we ask that you request Indian Prime Minister Narendra Modi to liberalize current FDI restrictions in the business-to-consumer e-commerce sector.

The Government of India prohibits foreign businesses from selling items directly to Indian consumers over the Internet. Although U.S. businesses are now allowed to operate marketplaces that allow for third-party online sales, U.S. businesses cannot sell products online directly to Indian consumers without involving a "middle man." We believe that India should allow FDI in all forms of business-to-consumer and that it should be open for all products. We believe such liberalization would benefit the Indian and U.S. economies, as well as helping the nearly 400 million Indians that live below the poverty line with access to cheaper goods and job opportunities.

In India, online generation of additional retail transactions would increase consumption, decrease consumer prices, improve market access for small- and medium-sized companies, and create jobs across a range of professional fields. China has already experienced this phenomenon. China's liberalization of e-commerce led to a compounded annual growth rate of 120% for 10 years and its online business-to-consumer e-commerce reached $26 billion by the 3rd quarter in 2013.

The Indian e-commerce market currently sits at about $3.5 billion and is expected to increase to $6 billion in 2016. The move to FDI in e-commerce would benefit Indian consumers by creating a competitive pricing environment. With the increase in low-cost smart phones and mobile broadband, penetration is expected to be significant in rural and semi-rural areas, so e-commerce would have an outsized impact on consumers in rural areas. In fact, this is already beginning to happen -- India's Tier II and III cities are breaking ranks to become top cities for e-commerce. These consumers gain access to goods and services through retailers that currently lack brick-and-mortar locations. With liberalization, some estimate that e-commerce will contribute up to 4% to India's GDP by 2020 and has potential revenues of $125-160 billion by 2025. Such liberalization could create 250,000 jobs directly and more than 1 million jobs in customer service, IT, logistics, transportation, and administration by 2021.

Liberalization of the FDI restrictions also would help to further your goal of doubling U.S. exports. By removing the "middle man" currently required by Indian law, U.S manufacturers can price their products more competitively. In addition to more competitive prices, U.S. exporters will also benefit from access to new markets.

We urge you to actively encourage Prime Minister Modi and the Government of India to liberalize the foreign direct investment restrictions in the e-commerce sector. Such a move would benefit the economies of both India and the United States.

Sincerely,

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