Chennai: The Centre is considering revising the foreign investment rules for e-commerce, three sources and a government spokesman said, a move that could compel players, including Amazon.com Inc, to restructure their ties with some major sellers.
The government discussions coincide with a growing number of complaints from the country’s bricks-and-mortar retailers, which have for years accused Amazon and Walmart Inc-controlled Flipkart of creating complex structures to bypass federal rules, allegations the US companies deny.
India only allows foreign e-commerce players to operate as a marketplace to connect buyers and sellers. It prohibits them from holding inventories of goods and directly selling them on their platforms.
Amazon and Walmart’s Flipkart were last hit in December 2018 by investment rule changes that barred foreign e-commerce players from offering products from sellers in which they have an equity stake. Now, the government is considering adjusting some provisions to prevent those arrangements, even if the e-commerce firm holds an indirect stake in a seller through its parent, sources said.
The changes could hurt Amazon as it holds indirect equity stakes in two of its biggest online sellers in the country. Amazon said e-commerce created ‘huge job opportunities’ and is a significant contributor to economic growth.
‘Any major alterations’ to the policy will adversely impact small-and-medium-sized businesses, it said in an emailed statement.
Walmart and Flipkart did not immediately respond to a request for comment.
Yogesh Baweja, the spokesman for the Ministry of Commerce and Industry, which is working on the issue, confirmed any changes will be announced through a press note.