Amazon.com Inc’s grocery service will soon be back on its India website. This news came after the online retail giant faced disruption from revised e-commerce curbs which occurred in on Feb. 1.
As per new federal rules, companies are barred from selling products via vendors in which they have an equity interest. This forced Amazon India to remove hundreds of thousands of products from its site last week.
The policy has also worried Walmart-owned Indian rival, Flipkart, as it is made them to alter their business model.
India allowed Amazon to retail food products in the country in 2017 and the company committed $500 million in investment. Amazon was using that government permission to sell some Pantry grocery products via an affiliate, two sources familiar with the plans told Reuters.
Some of Amazon‘s products, such as its own range of Presto-branded home cleaning goods, are still unavailable. However, there are some which have returned for sale in recent days.
It has been reported that some products were being sold through sellers that Amazon no direct or indirect equity stakes with, making them in tune with the new rules.
However, it is an undeniable fact that this new policy has affected both Amazon and Walmart.
It has also been reported that Morgan Stanley warned that these new regulations could increase the cost of doing business. It would also add uncertainty over losses for Flipkart. Last year, Walmart pumped in $16 billion to buy 77% stake in Flipkart which is its biggest deal till date.
It may be too early to assess, but Morgan Stanley said it makes sense for Walmart to “walk away” if it can’t see any hope for huge profits from the country.
Investors too have criticized this policy. Sudden changes, they have said causes e-commerce curbs to raise broad worries and an undecided regulatory environment in India.
Many have criticized this sudden move. They say that such unstable policies could deter economic growth.
Small and marginal traders are happy with these new rules. They had complained that e-commerce giants used their control to choose affiliated vendors over them. This had created an unfair marketplace.
