New e-commerce rules in India that went effect in the country on the 1st of February has resulted in Amazon India pulling a wide range of products from its website. The company pulled the products to comply with the latest set of rules that were laid out by Indian authorities back in December 2018. According to the rules, e-commerce companies in India are not allowed to offer products from sellers in whose companies they have a stake. People close to the developments at Amazon India stated that the process of pulling non-compliant products started on Thursday night. One of the sources told Reuters, “The company has no choice, they are fulfilling a compliance requirement. Customers will suffer.”
Some of the products that have disappeared include products sold by Cloudtail and Shopper’s Stop. Amazon owns a stake in both those companies. In addition to that, products like Amazon’s Echo speakers and home cleaning products from its in-house brand Presto have also been taken off. Amazon and Walmart-owned Flipkart had both lobbied against the new rules and in fact, urged the Indian government to delay the implementation. CEO of Flipkart Kalyan Krishnamurthy had written a letter to the concerned authority last month stating that there would be a significant disruption for customers if the rules were implemented in February. It is believed that the current administration in India brought about these rules in a bid to placate smaller traders in India ahead of the elections. Over the years, they have been vocal about ‘unfair’ pricing policies of e-commerce companies.
The Indian market is one of the biggest for Amazon, and the company has invested $5.5 billion in the country so far to gain a foothold in the exploding e-commerce industry. During a conference call last week with reporters this week following the announcement of the company’s earnings report, the Chief Financial Officer of Amazon, Brian Olsavsky stated that although the circumstances in India are ‘a bit fluid.’ However, he stressed that India remains an excellent long term bet for Amazon.
Amazon generated record-breaking profit and sales during the festive period, but they conceded that due to the situation in India, their first-quarter earnings might not be up to the mark. On the other hand, Flipkart, which was bought by Walmart for $16 billion last year, also expressed its disappointment at the new set of regulations. The effect on Flipkart is yet unknown but the company’s vice-president Rajneesh Kumar said in a statement “We believe that policy should be created in a consultative, market-driven manner and we will continue to work with the government to promote fair pro-growth policies.”