January 31, 2019
By Aditya Kalra and Sankalp Phartiyal
NEW DELHI/MUMBAI (Reuters) – Amazon.com began removing a wide array of products from its India website late on Thursday to comply with the country’s new foreign investment curbs that kick in from Feb. 1, two sources with direct knowledge of the matter told Reuters.
In December, India modified foreign direct investment (FDI) rules for its burgeoning e-commerce sector that has drawn major bets from the likes of Amazon.com Inc and Walmart Inc, which earlier in 2018 had acquired a controlling stake in homegrown e-commerce player Flipkart.
India’s new e-commerce investment rules block the companies from selling products via vendors in which they have an equity interest and also bar them from making deals with sellers to sell exclusively on their platforms.
Both Amazon, and Walmart’s Flipkart, had extensively lobbied against the latest rules and pushed for a delay in their implementation, but India late on Thursday said the deadline was going to stand.
Industry sources have said the new rules would force the e-commerce giants to change their business structures and raise compliance costs.
Hours before the Feb. 1 deadline on Thursday, numerous items sold by sellers, such as Cloudtail, in which Amazon holds an indirect equity stake, were no more available on the website.
Two sources with direct knowledge told Reuters the products were being removed to comply with the new India rules.
“The company has no choice, they are fulfilling a compliance requirement … the customers will suffer,” said one of the sources.
Exclusive deals with the sellers, in compliance with new norms, will also be discontinued, the sources said. The products that were no longer immediately available included its range of Echo speakers, Amazon’s Presto-branded home cleaning products and other Amazon Basics products such as chargers and batteries.
Amazon India told Reuters it was “committed to remaining compliant to all the laws of the land”, adding that all sellers make their own independent decisions of what to list and when.
It was not immediately clear what were the changes on Flipkart’s website. The company did not immediately respond to a request for comment.
(Reporting by Aditya Kalra and Sankalp Phartiyal)