Amazon India has resumed operations and the site is changing its business structure to comply with the new federal e-commerce regulations that came into effect last week. Two sources said that one of the biggest sellers on Amazon India has returned.
India’s revised foreign direct investment rules came into effect on February 1st, which prohibits companies such as Amazon from selling products from suppliers that they or their group companies hold.
Amazon, which indirectly holds a 49% stake in Cloudtail and Appario, was forced to remove hundreds of thousands of items sold by the top suppliers.
But a person familiar with the matter said that after Amazon reduced its indirect shareholding to 24%, Cloudtail has returned to the market, with more than 300,000 products listed on Amazon.
Amazon said in a statement: “We are not involved in the equity of any seller company in our market.
Catamaran is an investment company launched by Infosys founder N.R. Narayana Murthy said that it has made “necessary changes” to comply with the rules, but did not elaborate.
Another source said: Amazon is doing a similar restructuring for other big seller Appario.
The two sources declined to give their names because they were not authorized to discuss the matter with the media.
The new rules were introduced after complaints from small Indian traders who said that Amazon and Wal-Mart’s online retailer Flipkart used their control of the inventory of affiliated suppliers to unfairly offer discounts.
The All India Traders Association (CAIT) claims that Amazon’s latest move is to circumvent new regulations that will drive a more rigorous review of e-commerce companies.
Praveen Khandelwal, secretary general of the Ministry of Industry and Information Technology of India, said the organization would ask the Ministry of Industry and Information Technology of India to clarify that online retailers should not hold direct or indirect equity in their suppliers. The industrial sector did not immediately respond to requests for comment.
Amazon and Wal-Mart have lobbied against the new rules but failed, and demanded a postponement.
Although Amazon’s products are affected, Flipkart is less affected because it does not hold shares among suppliers.
A person familiar with the matter said that Flipkart’s sellers were consuming inventory before the new regulations came into effect, and the company is working with partners to ensure they comply with the new regulations when selling on the platform.