BENGALURU: Government’s revised policy on FDI in e-commerce may give a shock to Amazon. It could throw a spanner in the joint venture between the world’s largest e-tailer and NR Narayana Murthy’s Catamaran Ventures’ Cloudtail India, billed as one of the top three sellers on its platform.
Frontizo Business Services, Ashok Patni Group’s JV with Amazon, will also face heat after the revised FDI policy prohibited e-commerce firms from selling products of companies in which they hold stake. Patni-Amazon JV sells on Amazon as Appario Retail. The new policy will come into effect in February.
“The clarification further increases restrictions on who can sell on the e-commerce platform. Accordingly, this clarification is clearly targeted on plugging loopholes in the earlier policy. E-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to RBI, confirming compliance of above guidelines by September 30 of every year for the preceding financial year,” said Atul Pandey, partner in law firm Khaitan & Co.
Murthy’s Catamaran has placed bigger bets on Cloudtail with a robust expansion blueprint that, in turn, reduced Amazon’s dependency on third-party sellers to drive sales.
With concerns around preferential tag for top sellers, Cloudtail has scaled down its exposure to Amazon India after the government said a single seller cannot sell more than 25% of a marketplace’s overall sales. The latest guidelines could only add to Cloudtail’s business woes. Appario Retail houses one of Amazon’s fastest growing sellers. Appario clocked Rs 800 crore in revenue in 2017-18. Prior to this, its corporate filings showed the entity was primarily engaged in trading activities on Amazon.in.
An Amazon spokesperson told TOI the company is evaluating new guidelines. A spokesperson for Appario declined to comment. Emails sent to Cloudtail and Catamaran Ventures did not elicit any response till the time of going to press.
The development was reported by ETRetail.com