U.S. Sens. Mark R. Warner (D-VA) and John Cornyn (R-TX), co-chairs of the bipartisan Senate India Caucus, sent a letter to President Barack Obama ahead of his trip to India urging the President to discuss liberalization of current Foreign Direct Investment (FDI) restrictions in the business-to-consumer e-commerce sector with Indian Prime Minister Narendra Modi.
Original Title
Sens. Warner, Cornyn Letter to President on Ecommerce
U.S. Sens. Mark R. Warner (D-VA) and John Cornyn (R-TX), co-chairs of the bipartisan Senate India Caucus, sent a letter to President Barack Obama ahead of his trip to India urging the President to discuss liberalization of current Foreign Direct Investment (FDI) restrictions in the business-to-consumer e-commerce sector with Indian Prime Minister Narendra Modi.
U.S. Sens. Mark R. Warner (D-VA) and John Cornyn (R-TX), co-chairs of the bipartisan Senate India Caucus, sent a letter to President Barack Obama ahead of his trip to India urging the President to discuss liberalization of current Foreign Direct Investment (FDI) restrictions in the business-to-consumer e-commerce sector with Indian Prime Minister Narendra Modi.
nited States Senate
WASHINGTON, DC 20510
January 22, 2015
President Barack Obama
1600 Pennsylvania Avenue NW
Washington, DC 20500
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 IIL 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 by2025. 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
US. exports. By removing the “middle man” currently required by Indian law, U.S.
‘manufacturers can price their products more competitively. In addition to mote 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,
Mob. Move, bl (mn
MARK WARNER JOHN CORNYN
United States Senator United States Senator