Amazon Begins Pulling Products From Its India Site as Local Government's Strict New Policies Go Into Effect (venturebeat.com)

An anonymous reader writes: Amazon and Walmart have been dealt a big blow in India, one of their most important markets, after the local government today declined a request to extend the deadline for the implementation of revised rules regarding how foreign ecommerce platforms sell goods and conduct business in the country. The local government, which revised its ecommerce policies late December, prohibit Amazon and Flipkart from selling goods from companies in which they have a stake. The two companies were hoping the Department of Industrial Policy and Promotion, the government agency that issued the revised policies, would extend the February 1 deadline. But efforts to gain more time were unsuccessful. (At around 6:50 p.m. local time -- 8.20 a.m. Pacific, the government said it won't be extending the deadline.)

Under the current laws, foreign-owned ecommerce companies are not allowed to sell directly to customers (in other words, to operate under an inventory-based model of ecommerce). Instead, they can only provide a marketplace that acts as "an information technology platform" and serves as a facilitator between "buyer and seller." To bypass this restriction, both Amazon and Flipkart, which sold a majority stake to Walmart last year, have acquired stakes in some of the biggest third-party sellers in the country. For instance, Amazon owns stake in parent companies of Cloudtail India and Appario Retail, while Flipkart until recently controlled WS Retail, the largest seller on its platform. The local government's revised policies fixed that loophole.

Starting at 1.30 am Friday local time, several Amazon-owned products, including select Echo smart speakers, as well as some travel bags, batteries, and chargers under Basics brand, have become unavailable on Amazon's website.

Comments

Extreme protectionism

[lgw]

That's taking protectionism to the extreme. Not even a high tariff, but just a "nope". Interesting times.

As designed

[rmdingler]

The megaretailers devised a workaround to avoid Indian protectionist trade policies, and the government closes the loophole that allowed Walmart & Amazon to exploit the intent of the legislation.

Unless your beef is with a developing nation's right to grow domestic industry, this is what noncorrupted government is supposed to do.

I disagree

[rsilvergun]

this isn't about protectionism, this is about preventing a potentially hostile company from monopolizing, well, everything.

Amazon has been allowed to run at profit margins that no other company every would be because investors are waiting for the day when they put literally everyone out of business. When that happens it'll be like a company store on a national or global basis.

India is right to worry about that. It's crazy that the rest of the world isn't.

not protectionism at all

[bingoUV]

Never thought I'll defend Indian government action, but here goes something that might appear to be a defence (it is not) :
Amazon is :
1. Refusing responsibility of being a seller when buyer demands the service any seller is required to provide
2. Undercutting the actual brick-and-mortar sellers - not only by its economy of scale but by subsidizing the supply-chain of the "sellers" on its platform. So the actual sellers who are providing the necessary services are shutting shop

All sellers are supposed to choose one of the 2 models :
1. Be a seller : then take all responsibility of being a seller
2. Enabling other sellers : then don't sell your own stuff, and don't subsidize your sellers in any way.

I am not even saying this regulation is the best, or above average, response to the situation. But protectionism it is not.