One of the biggest sellers on Amazon India has reportedly made a comeback after the e-commerce giant altered its business structures in accordance with the new federal e-commerce curbs that were enacted recently.
As per sources, India’s modified FDI rules that became effective from February 1, preventing companies like Amazon from trading products from vendors, where they or their group companies, own equity holdings. As a result, Amazon was forced withdraw thousands of items sold by its top vendors like Cloudtail and Appario as it indirectly owned 49% equity in both firms, claimed sources.
Recently, Cloudtail has returned with over 300,000 products listed on Amazon, post the American e-commerce company reduced its indirect holding in the firm to 24 percent. The stake was bought by Catamaran Ventures, an investment firm launched by N.R Narayana Murthy, the Founder of Infosys, and the majority stakeholder in Cloudtail, said sources equipped with the knowledge of the matter.
The company has no equity participation in any vendor company active on its online marketplace, said Amazon, without sharing details regarding the changes in its indirect holding of Cloudtail.
N.R Narayana Murthy said in a statement that Catamaran Ventures had made necessary changes to comply with the rules.
Reportedly, Amazon is developing a similar restructuring for Appario, the other big seller on Amazon India. The new rules were launched after complaints from small Indian traders suggested that Amazon and Flipkart offered unfair discounts using their control on inventory from affiliated vendors, cited credible sources.
The Confederation of All India Traders, the advocate for small traders and businesses which urged for tougher scrutiny for e-commerce players, alleged Amazon’s latest move as a circumvention of the new rules. Praveen Khandelwal, Secretary General of CAIT stated that the group would demand India’s industries department to ascertain that online retailers should not own direct or indirect stake in their vendors.
Although Amazon’s product listings have been disrupted, the other Indian ecommerce firm Flipkart, now owned by Walmart, has been less impacted as it held no equity holdings in its vendors.