Revised FDI norms for e-commerce firms paralyses functioning of Amazon's Global Store; product range plunges

  • From six million products before 1 February, the number of products plunged to about 6,000 under this entity on Amazon India

  • After the new e-commerce rules came into effect, Amazon was forced to take down several items from its India website

  • The revised e-commerce investment rules bar online retailers from selling products via vendors

After tightening the foreign direct investment (FDI) norms for e-commerce marketplaces last month, Amazon's Global Store, through which Indians used to buy American goods directly, has almost become non-existent, said a media report.

Amazon Exports Sales LLC, the main entity for Global Store, is selling directly in India, said a report in The Times of India.

From six million products before 1 February, the day the revised FDI norms came into being, the number of products plunged to about 6,000 under this entity on Amazon India last month, said the report citing Marketplace Pulse, a data platform on online marketplaces.

 Revised FDI norms for e-commerce firms paralyses functioning of Amazons Global Store; product range plunges

Representational image. Reuters

After the new e-commerce rules came into effect last month, Amazon was forced to take down an array of items from its India website including Echo speakers, batteries and floor cleaners, reported Reuters.

Two sources with direct knowledge of the matter said the products began to disappear from the Amazon India site late on Thursday as it began complying with the revised norms before a midnight deadline.

“The company has no choice, they are fulfilling a compliance requirement ... customers will suffer,” said one of the sources.

In December, the government modified FDI rules for its burgeoning e-commerce sector, which has drawn major bets from not only Amazon but also the likes of Walmart Inc, which last year bought a majority stake in homegrown e-commerce player Flipkart.

The new e-commerce investment rules bar online retailers from selling products via vendors in which they have an equity interest, and also from making deals with sellers to sell exclusively on their platforms.

By 1 February, numerous items sold by vendors such as Cloudtail, in which Amazon holds an indirect equity stake, were no longer available on the Amazon India site.

When the industry continued to raise concerns about the new FDI norms governing the e-commerce space, former Infosys chief financial officer Mohandas Pai said it was a move in the right direction, said a PTI report.

E-commerce firms are "using abusive, predatory pricing to drive out local businesses and we do not want global monopolies," Pai said last month.

"The regulations that we have introduced is somewhat reasonable even though the way it was done is wrong," he said.

With inputs from agencies

Updated Date: Mar 11, 2019 15:26:41 IST