Recent changes in the FDI guidelines announced, e-commerce companies are struggling to restructure their business models. At present, after the change in norms, market giant Amazon is questioning the future of its food retail business in India.
Amazon is also seeking legal advice for the same, as per a report in The Economic Times.
The company is consulting legal advisers about whether Amazon Retail India Pvt Ltd (ARIPL) can continue selling on the marketplace after the new guidelines come into effect on February 1.
In July 2017, Amazon had received the green light to invest nearly $500 million in a food-only company. ARIPL is fully owned by Amazon. ARIPL sells locally-sourced food products through offline and online retail stores. And this is exactly where the problem arises as the new policy bars e-commerce companies from selling products on their website in which they have any sort of equity.
The new policy has created a lot of confusion among the market players. As per the source close to Amazon said that everything is convoluted and complex. Amazon is not sure of the way forward for its retail entity.
A spokesperson said, “We have always operated in compliance with the laws of the land and are evaluating the new guidelines to engage as necessary with the government to gain clarity so that we remain true to our commitment to India.”
As per the new rules, Amazon’s joint venture with Catamaran Ventures, Cloudtail, is no longer allowed to sell its products on the marketplace. Similarly, the rival Walmart and its entities cannot sell any product on Flipkart.