(Commonwealth_India) The Trump administration is intensifying efforts to persuade India to open its rapidly growing $125 billion ecommerce market to American giants like Amazon and Walmart. These efforts form a crucial component of a broader trade deal currently under negotiation between the two countries. The talks are unfolding under the looming threat of increased US tariffs on Indian exports and are set to cover multiple sectors, including food, automobiles, and digital commerce.
According to various sources, including US government officials, industry insiders, and lobbyists, the United States is advocating for what it describes as a “level playing field” for foreign ecommerce companies operating in India. At the heart of the dispute lies India’s regulatory framework, which restricts foreign-owned ecommerce platforms like Amazon and Walmart-owned Flipkart from holding inventory or selling their products directly. Instead, the regulatory framework only permits them to function as online marketplaces, thereby facilitating sales by third-party vendors. In contrast, Indian competitors, such as those owned by Mukesh Ambani’s Reliance group, are allowed to own and sell products through their platforms—an arrangement Washington criticizes as a non-tariff barrier and a form of protectionism.
The latest push comes amidst high-level diplomatic engagement. US Vice President JD Vance met with Indian Prime Minister Narendra Modi in New Delhi, where both leaders reportedly expressed optimism over the progress being made in the ongoing trade negotiations. A statement from the Indian government emphasized mutual efforts to deepen cooperation across strategic areas, including energy, defense, and emerging technologies. However, the pressing issue of ecommerce access remains a sticking point, particularly with President Trump having temporarily delayed the imposition of a 26% tariff on Indian exports. That pause, which spans a 90-day window, is intended to give both sides a chance to finalize a comprehensive agreement.
Behind the scenes, powerful US business interests are playing a central role in shaping the direction of these talks. Industry executives familiar with the discussions have confirmed that the Trump administration is working in close coordination with American e-commerce giants. Walmart CEO Doug McMillon has been directly involved, having raised concerns about India’s ecommerce restrictions during a meeting with President Trump at the Mar-a-Lago estate. McMillon later participated in a White House discussion alongside other major US retailers to address the broader issue of tariffs. His company, Walmart, is heavily invested in the Indian market through its ownership of Flipkart, a leading e-commerce platform in India. Amazon’s CEO, Jeff Bezos, who previously attended Trump’s inauguration, is also closely watching the situation, given Amazon’s significant but still secondary position in the Indian market.
Amazon, which entered India in 2013, has steadily expanded its operations but continues to trail behind Flipkart in user engagement. According to analysts from Bank of America, Amazon had fewer than 40 million daily active users in India toward the end of last year, compared to Flipkart’s 50 million. This disparity underscores the intense competition not only between American firms but also against powerful local players like Reliance, which has established a formidable presence in both traditional and online retail.
Reliance, led by Mukesh Ambani—Asia’s richest man—has emerged as a key player in India’s retail landscape. Its platforms benefit from fewer regulatory constraints than those faced by foreign firms, giving them a notable advantage in the domestic market. Their success has added a layer of complexity to the negotiations, as any changes in Indian policy could disrupt the existing balance of power.
The potential liberalization of India’s ecommerce market has sparked domestic political and economic debate. Praveen Khandelwal, a member of parliament representing Modi’s Bharatiya Janata Party and secretary-general of the Confederation of All India Traders, voiced concerns about the implications of opening up the market to foreign corporations. While acknowledging that foreign investment can be beneficial, he warned that such moves must not come at the expense of India’s 90 million small traders who form the backbone of the country’s traditional retail ecosystem. He characterized the US approach as part of a broader strategy of “economic diplomacy” designed to secure global dominance for its corporate giants.
This tension over ecommerce regulations is not new. As noted by Arvind Singhal, chairman of Technopak Advisors, the US has been attempting to gain broader access to India’s retail market since 2006, only to be met with persistent resistance. Beyond the structural restrictions on inventory ownership, US companies have also complained of regulatory hurdles such as frequent product inspections conducted by India’s Bureau of Indian Standards, which further complicate their operations.
With bilateral trade between the two nations currently valued at under $250 billion, both sides have stated their ambition to more than double this figure to $500 billion in the coming years. Achieving this goal, however, may hinge on resolving contentious issues like e-commerce access, foreign direct investment limits, and tariff barriers. As the clock ticks down on Trump’s 90-day tariff pause, negotiators are under increasing pressure to resolve global market access, corporate interests, and domestic economic priorities.
