WASHINGTON – U.S. Sens. Mark Warner (D-VA) and John Cornyn (R-TX) urged President Obama to discuss loosening current Foreign Direct Investment (FDI) restrictions in the e-commerce sector with Indian Prime Minister Narendra Modi on his upcoming trip to India.  Both Senators serve as co-chairs of the bipartisan Senate India Caucus, which Senator Cornyn co-founded in 2004.

“We believe [this FDI] 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,” wrote Sens. Cornyn and Warner. 

Currently, India prohibits foreign businesses from selling items directly to Indian consumers over the Internet, which means that U.S. businesses cannot sell products online directly to Indian consumers without involving a “middle man.” If the prohibition were lifted, many U.S. businesses would have greater access to India’s $4.9 trillion economy and a growing middle class. It also has the potential to increase competition in India by providing less expensive goods and creating 250,000 jobs directly, with the potential for more than 1 million jobs in customer service, IT, logistics, transportation, and administration by 2021.

The Indian e-commerce market currently sits at about $3.5 billion and is expected to increase to $6 billion in 2016. With the increase in low-cost smart phones and mobile broadband, penetration is expected to be significant in rural and semi-rural areas. With expanded e-commerce, these consumers gain access to goods and services through retailers that currently lack brick-and-mortar locations.