new delhi, Oct. 13 -- US trade negotiators want India to allow online marketplaces such as Amazon India and Walmart-owned Flipkart to stock and sell their own goods, seeking a policy change that could reshape India's online retailing. India bars foreign-owned online retailers from holding inventory, prompting them to market goods from a large network of vendors. In contrast, locally-funded online retailers such as Ajio, BigBasket and Nykaa hold and sell their own goods. The change, if approved, could heighten competition between the two categories. The US has cited the need for a "level playing field" between the two categories, the people cited above said on the condition of anonymity. "Both sides are exploring ways to address the issue of greater market access for e-commerce companies, mainly US-based firms Amazon and Walmart-owned Flipkart," said one of the two people mentioned earlier. The US has imposed a 50% tariff on India, including a 25% penalty for Russian oil purchases, something India has refused to wind down. The negotiations are on hold due to the US government shutdown but are expected to resume later, the people cited above said. "The Indian side is discussing the issue with its US counterparts to resolve it in a mutually beneficial manner. They are assessing its implications on the policy framework, and any decision will be taken keeping the country's best interests in mind," the second person said. A spokesperson for the US Embassy in New Delhi said, "Due to the lapse in appropriations in the US government, we are unable to respond to routine press inquiries." Queries emailed to a commerce ministry spokesperson remained unanswered. "The US demand to allow an inventory model in India's e-commerce sector raises serious concerns," said a top official of Confederation of All India Traders, which has previously complained about Amazon and Flipkart allegedly violating the no-inventory rule. "Such a framework could indirectly allow foreign e-commerce companies to participate in retail trading, which goes against the spirit of India's FDI policy. This may also affect small traders and disturb the balance of competition in the domestic market," the official said, requesting anonymity. India barred foreign-funded e-commerce companies from operating inventories in March 2016, aiming to prevent price manipulation and protect fair competition for small retailers....