India likely to ease restrictions for foreign online retailers in July

June 5, 2014

Mumbai/New Delhi, Jun 5: India could allow global online retailers such as Amazon.com Inc to sell their own products as early as next month, removing restrictions that have held back competition in one of the world's biggest, and most price-sensitive, retail markets.

The decision, which is likely to be announced in or alongside the budget, is one of the first tangible signs of economic reform by the business-friendly government of Prime Minister Narendra Modi, who was sworn in 10 days ago.

Foreign online retailers
The move could allow the government to circumvent political opposition to opening up India's $500 billion retail sector to global retail giants such as Wal-Mart Stores Inc.

Four people privy to discussions within the government told Reuters that officials believed a more robust online retail sector would spur manufacturing and consumption, helping revive an economy that has grown at below 5 percent for two years, the longest period of sub-par expansion since the late 1980s.

"Most stakeholders support FDI (foreign direct investment)," said a senior government official, referring to e-commerce. "We have pitched for opening it up completely."

Industry surveys say e-commerce could contribute up to 4 percent to India's economy by 2020 from under one percent now.

The official, like others who spoke to Reuters on the move, declined to be named because the matter was confidential. When asked about the decision, a spokesman for India's commerce and industry ministry declined to comment.

Although New Delhi has been discussing opening up the sector since last year, the sources said a decision was imminent.

"The way the government is initiating discussion, it is very clear that they are extremely serious about it," said an executive with a global online retailer who was invited to a meeting two weeks ago between the government and foreign and domestic companies.

"They understand this will help small traders to grow their business, expand and reach out to a larger market," he said.

While Modi's Bharatiya Janata Party (BJP) has been a vocal critic of the country's multi-brand retail policy, it has remained quiet on the proposal to open up the e-commerce sector.

On the campaign trail, Modi had asked small traders not to feel intimated by big online retail chains.

"We should not worry about these things. Our children have taken IT to the world. We'll have to embrace it," he told a gathering of small traders in February.

Modi will eventually decide investment guidelines as well as the foreign ownership cap, but the sources said the rules will be clearer and better than those for foreign investment in the supermarket sector.

For example, implementation of the policy will not be left at the discretion of individual states, they said. But local sourcing and investment in the supply chain will be required.

An Amazon spokesperson said opening up the sector would be good for consumers and Indian businesses and spur infrastructure development.

"It would allow us to partner with local manufacturers to source products not carried by other sellers on the marketplace, giving Indian consumers unique and wider choices at lower prices."

Deepa Thomas, spokeswoman for eBay in India, said it was excited about the opportunity and believed in the need for a carefully calibrated approach to opening up the sector.

"I can't speculate on what might happen going forward, but I can tell you that we're very pleased about the launch of the business so far out there," Peter Faricy, Amazon's global head of marketplaces, said on Wednesday when asked about the potential impact of that change in India.

CONSUMPTION-LED GROWTH

The industry ministry that drafts FDI rules recently met officials from companies including Amazon, Google, eBay Inc, Wal-Mart and Indian e-tailer Flipkart to finalise the investment guidelines, the people said.

Global online retailers like Amazon and eBay are currently banned from selling products they have sourced themselves, and must rely on third-party suppliers. Their platforms, which they own fully, are marketplaces for these outside suppliers.

The government is likely to end this ban, paving the way for global retailers to bring their formidable supply chain, and cheaper goods, into India, potentially boosting consumption and benefiting small manufacturers and traders.

Politically influential small-scale traders have traditionally opposed any foreign direct investment in retail, fearing they would be eclipsed by larger global rivals.

The BJP is also against such investments, but the sources said the government supported the online retail expansion as global e-commerce firms would still have to rely on small traders to generate business.

Opening up the online retail business for foreign direct investment is also widely expected to eliminate middlemen, leading to lower transaction, overhead, inventory and labour costs, industry officials said.

Modi, who last month won the first outright parliamentary majority in three decades in Asia's third-largest economy, wants to kick start the sluggish economy by winning back domestic and foreign investor confidence.

Regulatory uncertainty under the previous government prevented foreign supermarket chains from setting up shop in the country. So far, only Britain's Tesco PLC has announced an investment. In its election manifesto, the ruling BJP vowed to ban foreign supermarkets.

LIFELINE TO LOCAL ONLINE RETAILERS?

E-commerce is growing at the compound annual growth rate of 34 percent in India, according to a report from Digital-Commerce, IAMAI-IMRB.

Online travel services currently account for over 70 percent of consumer e-commerce transactions. Online sales of retail goods were $1.6 billion last year, according to research firm Forrester. But they will swell to $76 billion by 2021, predicts consultancy Technopak.

By comparison, China's business and consumer e-commerce sales are projected to surpass $180 billion this year.

If approved, the policy will not only allow foreign retailers to expand in India, but will also give local online businesses access to much-needed foreign capital.

The companies vying for a bigger slice of the Indian online retail market include the country's largest e-tailer Flipkart, marketplace Snapdeal and fashion retailers Myntra and Jabong.

All retailers in the business are losing money due to high costs owing to high-voltage advertising campaigns, heavy discounts and an underdeveloped logistics network.

Only 18 of the 52 e-commerce start-ups in India - which raised $700 million in venture capital funding in the three years ending 2012 - were able to raise follow-on investments last year, investment bank Allegro Advisors said.

Most Indian e-tailers are aggressively scaling up in an effort to have the muscle to compete with Amazon, which slashed prices and improved delivery standards after entering India last year and is looking to acquire smaller retailers.

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News Network
May 4,2024

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Canadian Police said they have arrested three Indians they suspect were part of the alleged hit squad that had killed Hardeep Singh Nijjar, a Sikh separatist leader involved with the Khalistan movement, which calls for an independent Sikh state.

Nijjar's killing had become the epicentre of a diplomatic row between India and Canada last year after Prime Minister Justin Trudeau alleged the role of "Indian agents" in the murder. India had rejected the charge as "absurd" and "motivated".

The three arrested Indians - Karan Brar, 22, Kamalpreet Singh, 22, Karanpreet Singh, 28 - were living as non-permanent residents in Alberta for three to five years, said Superintendent Mandeep Mooker, who leads the Integrated Homicide Investigation Team. The police have also released their photos.

They have been charged with first-degree murder and conspiracy to commit murder, showed court documents.

Police said that none of the suspects were known to them earlier and they were investigating their possible ties to the Indian government.

The murder remains "very much under active investigation," Royal Canadian Mounted Police (RCMP) Assistant Commissioner David Teboul told a press conference on Friday.

"There are separate and distinct investigations ongoing into these matters, certainly not limited to the involvement of the people arrested today, and these efforts include investigating connections to the government of India," CTV News quoted him as saying.

Nijjar, a Canadian citizen who was wanted in India on various terror charges, was shot dead outside a gurdwara in Surrey on June 18, 2023. Trudeau's charge against India sparked a massive row later that year with both countries expelling diplomats of the other country.

A fresh row erupted earlier this week after separatist slogans on 'Khalistan' were raised at an event addressed by Trudeau, prompting New Delhi to summon their Deputy High Commissioner and lodge a strong protest.

On the sidelines of the event, Trudeau told reporters that Nijjar's killing had created a "problem" that he could not have ignored.

India rejected his comment and said it once again showed Canada provides political space given to separatism, extremism, and violence. "This not only impacts India-Canada relations but also encourages a climate of violence and criminality in Canada to the detriment of its own citizens," foreign ministry spokesperson Randhir Jaiswal said.

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News Network
May 17,2024

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In scorching heat on a busy Kolkata street last month, commuters sought refuge inside a glass-walled bus shelter where two air conditioners churned around stifling air. Those inside were visibly sweating, dabbing at their foreheads in sauna-like temperatures that were scarcely cooler than out in the open.

Local authorities initially had plans to install as many as 300 of the cooled cabins under efforts to improve protections from a heat season that typically runs from April until the monsoon hits the subcontinent in June. There are currently only a handful in operation, and some have been stripped of their AC units, leaving any users sweltering.

“It doesn’t work,” Firhad Hakim, mayor of the city of 1.5 crore, said on a searing afternoon when temperatures topped 40C. “You feel suffocated.”

Attempts in Kolkata and across India to improve resilience to extreme heat have often been equally ill-conceived, despite a death toll estimated at more than 24,000 since 1992. Inconsistent or incomplete planning, a lack of funding, and the failure to make timely preparations to shield a population of 140 crore are leaving communities vulnerable as periods of extreme temperatures become more frequent, longer in duration and affect a wider sweep of the country.

Kolkata, with its hot, humid climate and proximity to the Bay of Bengal, is particularly vulnerable to temperature and rainfall extremes, and ranked by the Intergovernmental Panel on Climate Change as among the global locations that are most at risk.

An increase in average global temperatures of 2C could mean the city would experience the equivalent of its record 2015 heat waves every year, according to the IPCC. High humidity can compound the impacts, as it limits the human body’s ability to regulate its temperature.

Even so, the city — one of India's largest urban centres — still lacks a formal strategy to handle heat waves.

Several regions across India will see as many as 11 heat wave days this month compared to 3 in a typical year, while maximum temperatures in recent weeks have already touched 47.2C in the nation’s east, according to the Indian Meteorological Department. Those extremes come amid the Lok Sabha election during which high temperatures are being cited as among the factors for lower voter turnout.

At SSKM Hospital, one of Kolkata’s busiest, a waiting area teemed last month with people sheltering under colorful umbrellas and thronging a coin-operated water dispenser to refill empty bottles. A weary line snaked back from a government-run kiosk selling a subsidized lunch of rice, lentils, boiled potato and eggs served on foil plates.

“High temperatures can cause heat stroke, skin rashes, cramps and dehydration,” said Niladri Sarkar, professor of medicine at the hospital. “Some of these can turn fatal if not attended to on time, especially for people that have pre-existing conditions.” Extreme heat has an outsized impact on poorer residents, who are often malnourished, lack access to clean drinking water and have jobs that require outdoor work, he said.

Elsewhere in the city, tea sellers sweltered by simmering coal-fired ovens, construction workers toiled under a blistering midday sun, and voters attending rallies for the ongoing national elections draped handkerchiefs across their faces in an effort to stay cool. The state government in April advised some schools to shutter for an early summer vacation to avoid the heat.

Since 2013, states, districts and cities are estimated to have drafted more than 100 heat action plans, intended to improve their ability to mitigate the effects of extreme temperatures. The Centre set out guidelines eight years ago to accelerate adoption of the policies, and a January meeting of the National Disaster Management Authority pledged to do more to strengthen preparedness.

The absence of such planning in Kolkata has also meant a failure to intervene in trends that have made the city more susceptible.

Almost a third of the city’s green cover was lost during the decade through 2021, according to an Indian government survey. Other cities including Mumbai and Bengaluru have experienced similar issues. That’s combined with a decline in local water bodies and a construction boom to deliver an urban heat island effect, according to Saira Shah Halim, a parliamentary candidate in the Kolkata Dakshin electoral district in the city’s south. “What we’re seeing today is a result of this destruction,” she said.

Hakim, the city’s mayor, disputes the idea that Kolkata’s preparations have lagged, arguing recent extreme weather has confounded local authorities. “Such a kind of heat wave is new to us, we’re not used to it,” he said. “We’re locked with elections right now. Once the elections are over, we’ll sit with experts to work on a heat action plan.”

Local authorities are currently ensuring adequate water supplies, and have put paramedics on stand-by to handle heat-induced illnesses, Hakim said.

Focusing on crisis management, rather than on better preparedness, is at the root of the country’s failings, according to Nairwita Bandyopadhyay, a Kolkata-based climatologist and geographer. “Sadly the approach is to wait and watch until the hazard turns into a disaster,” she said.

Even cities and states that already have heat action plans have struggled to make progress in implementing recommendations, the New Delhi-based think tank Centre for Policy Research said in a report last year reviewing 37 of the documents.

Most policies don’t adequately reflect local conditions, they often lack detail on how action should be funded and typically don’t set out a source of legal authority, according to the report.

As many as 9 people have already died as a result of heat extremes this year, according to the meteorological department, though the figure is likely to significantly underestimate the actual total. That follows about 110 fatalities during severe heat waves during April and June last year, the World Meteorological Organization said last month.

Even so, the handling of extreme heat has failed to become a “political lightning rod that can stir governments into action,” said Aditya Valiathan Pillai, among authors of the CPR study and now a fellow at New Delhi-based Sustainable Futures Collaborative.

Modi's government has often moved to contain criticism of its policies, and there is also the question of unreliable data. “When deaths occur, one is not sure whether it was directly caused by heat, or whether heat exacerbated an existing condition,” Pillai said.

In 2022, health ministry data showed 33 people died as a result of heat waves, while the National Crime Records Bureau – another agency that tracks mortality statistics – reported 730 fatalities from heat stroke.

Those discrepancies raise questions about a claim by the Centre that its policies helped cut heat-related deaths from 2,040 in 2015 to 4 in 2020, after national bureaucrats took on more responsibility for disaster risk management.

Local officials in Kolkata are now examining potential solutions and considering the addition of more trees, vertical gardens on building walls and the use of porous concrete, all of which can help combat urban heat.

India’s election is also an opportunity to raise issues around poor preparations, according to Halim, a candidate for the Communist Party of India (Marxist), whose supporters carry bright red flags at campaign events scheduled for the early morning and after sundown to escape extreme temperatures.

“I’m mentioning it,” she said. “It’s become a very, very challenging campaign. The heat is just insufferable.”

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May 8,2024

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Congress leader Sam Pitroda has stepped down from the post of Chairman of the Indian Overseas Congress and his resignation was accepted by the party. Congress leader Jairam Ramesh took to X and announced that Sam Pitroda had decided to resign from the key post "of his own accord".

Pitroda had been under fire over his controversial remark that Indians in the East resemble the Chinese while those in the South look like Africans.

"We could hold together a country as diverse as India -- where people on East look like Chinese, people on West look like Arab, people on North look like maybe White and people in South look like Africans. It doesn't matter. We are all brothers and sisters," Pitroda said during an interview with The Statesman.

The Congress immediately distanced itself from Pitroda's remarks, terming them "unacceptable".

"The analogies drawn by Mr Sam Pitroda in a podcast to illustrate India's diversity are most unfortunate and unacceptable. The Indian National Congress completely dissociates itself from these analogies," Jairam Ramesh said in a post on X.

The BJP also hit out at the Congress over Pitroda's remarks and termed them "racist and divisive".

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