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
Top 5 Small-Cap Funds With Best SIP Returns in 3 Years: What Rs 5,000 and Rs 10,000 SIPs in each fund have given
Gold and Silver rates today (May 27, 2024): MCX gold jumps after sharp losses last week, silver nears Rs 92,100/kg levels
70:15:15 Investment Strategy: Can you build over Rs 1 crore corpus with just Rs 20,000 salary? Know calculations
Shark Tank India: This startup gets blank check offer as revenue soars 10 times in 15 months, resulted in clash between judges
40,000 pension per month: How to get Rs 40,000 as pension every month by investing in NPS? Know the calculation
Top 5 large and mid cap SIP mutual funds in 5 Years: Rs 20,000 SIP in top fund has given a total of Rs 28.22 lakh
01:55 PM IST