Amazon changes business structures in India to bring big seller back
Amazon was forced to remove hundreds of thousands of items sold by top vendors Cloudtail and Appario as it indirectly held 49 percent equity stakes in both firms
One of the biggest sellers on Amazon.com Inc`s India website has returned after the online retail giant changed its business structures to comply with new federal e-commerce curbs that took effect last week, two sources told Reuters.
India`s modified foreign direct investment rules that kicked in on Feb. 1, prevent companies such as Amazon from selling products from vendors where they, or their group companies, have equity holdings.
Amazon was forced to remove hundreds of thousands of items sold by top vendors Cloudtail and Appario as it indirectly held 49 percent equity stakes in both firms.
But on Thursday Cloudtail had returned with more than 300,000 products listed on Amazon, after the U.S. e-commerce firm cut its indirect holding to 24 percent, one of the sources with knowledge of the matter told Reuters.
The stake was bought by the majority holders, Catamaran Ventures, the source said.
"We have no equity participation in any seller company on our marketplace," Amazon said in a statement, without sharing details of the changes in its indirect holding of Cloudtail.
Catamaran, an investment firm launched by Infosys founder N.R. Narayana Murthy, said it had made "required changes" to comply with the rules, but did not elaborate.
Amazon is working on a similar restructuring for the other big seller, Appario, a second source said.
The sources declined to be named as they were not authorized to discuss the same with media.
The new rules were introduced after complaints from small Indian traders who said Amazon and Walmart-owned online retailer Flipkart used their control over inventory from affiliated vendors to unfairly offer discounts.
The Confederation of All India Traders (CAIT), which has pushed for tougher scrutiny of e-commerce players, on Thursday alleged Amazon`s latest move was a circumvention of the new rules.
The group would ask India`s industries department to clarify that online retailers should not hold direct or indirect stakes in their vendors, CAIT Secretary General Praveen Khandelwal told Reuters.
The industries department did not immediately respond to a request for comment.
Amazon and Walmart Inc had unsuccessfully lobbied against the latest rules and pushed for a delay in their implementation.
Watch This Zee Business Video
While product listings on Amazon have been disrupted, Flipkart has been less impacted as it had no equity holdings in its vendors.
Flipkart`s sellers were exhausting inventory from before the rules kicked in, and the company was working with its partners to ensure they complied with new norms when they sold new inventory on the platform, a person with direct knowledge of the matter said.
Flipkart declined to comment.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
SRH vs GT IPL 2024 Ticket Booking Online: Where and how to buy SRH vs GT tickets online - Check IPL Match 66 ticket price, other details
Top 7 SWP Mutual Funds: Rs 50 lakh investment, Rs 70K monthly pension for 10 years, and Rs 42.30 lakh balance value; know more details
Gold and Silver rate today (May 13, 2024): Precious metal under pressure; yellow metal near Rs 72,400, white metal above Rs 84,600
SIP Returns: How Rs 3,000, 5,000, and Rs 10,000 SIPs can help you build retirement corpus of Rs 1.06 cr, Rs 1.77 cr, and Rs 3.53 cr
01:55 PM IST