The great Indian game of e-commerce laundering

Doing business in India is great, till you get too big for incumbents to ignore you. And you make their job easy by stepping on the collective toes of any number of politically powerful constituents like farmers, small businesses, government employees or retired army veterans. That’s exactly what Walmart’s $16 billion purchase of Indian e-commerce leader Flipkart in May 2018 achieved. It made Flipkart, and close second Amazon, too big to ignore.
 
Which explains the regulatory grenade lobbed by the Ministry of Commerce in the last few days of 2018, even as the two companies were basking in the glow of a great year, capped off by the resounding successes of their annual flagship sale events in October. Shorn of legalese, the government “clarified" that much of the way leading e-commerce platforms, including Flipkart and Amazon, were conducting business in India was illegal. 
 
And everyone had time till 1 February 2019 to remedy things.
 
If there was a silver lining in this ominous cloud, it was visible only to the hundreds of smart and expensive lawyers who knew exactly how to defuse this latest grenade as well. It was time for a new round of “e-commerce laundering.”
 
e-commerce laundering
noun
the concealment of the origins of e-commerce transactions, typically by means of transfers involving foreign entities or related businesses.
 
Indian consumer e-commerce has grown despite laws that prohibit it, because lawyers have created corporate structures that funnel sales transactions between entities so that what comes in isn’t what gets out.
 
Saif Iqbal, the contributing author of today’s fairly detailed analysis of India’s new e-commerce laws, their ostensible rationale, and their true impact, has been an experienced e-commerce executive himself. Which allows him to use deep operational know-how and category insights to explain how this pans out.
 
Hint: there’s absolutely zero operational changes thus far in response to the new laws, either at Flipkart or Amazon. But in terms of corporate structures, well, let’s just say their lawyers are already having a very busy and prosperous 2019.

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