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The American e-commerce giant, Amazon, sees very good long-term prospects in the Indian market, but is currently evaluating recent changes to FDI rules for online markets, to ensure that unintended consequences "for its customers and sellers do not top responsible for the company said.
With the coming into force of the new rules as of February 1, Amazon.in has removed from its platform a number of products, including mobile accessories and batteries. His "Pantry" service, which provides grocery items, is no longer available in India.
Amazon, which has committed more than 5 billion USD of investment in India, said its business was based on price choice and convenience.
"… there is a lot of uncertainty about the impact of changing government regulation on the e-commerce sector, we remain committed to complying with all laws and regulations, we will do so, but we evaluate Brian Olsavsky, CFO of Amazon, said in a recent call to the investor.
The new rules prevent foreign-invested online markets from offering the products of the sellers in which they hold an interest and prohibiting exclusive marketing agreements.
Another clause states that the inventory of a seller will be considered controlled by a market if more than 25% of the seller's purchases come from the market entity, including the unit. wholesale of the latter.
Products from vendors such as Cloudtail and Appario – which have Amazon investments in stocks – have been removed from the Amazon.in platform.
In response to customers' tweets about the impossibility of accessing "Pantry", Amazon said: "Amazon Pantry is currently not available in India. Please stay at the ############################################################## Look for Amazon.in to get the latest information on this. "
Amazon, like its rival Flipkart, backed by Walmart, was betting heavily on the grocery segment in India. Amazon has also committed $ 500 million to its food retail business in India.
In the fourth quarter, Amazon's net sales rose 20%, to reach 72.4 billion USD. International net sales were $ 20.8 billion for the three months ended December 2018.
For the first quarter of 2019, Amazon expects net sales in the range of USD 56 to 60 billion, representing growth of 10 to 18 percent over the corresponding quarter from January to March 2018.
"… our main concern is to try to minimize the impact on our customers and our sellers in India.We have focused our business on price selection and convenience.We do not think the changes brought in help these two types of customers in India as well as the sellers, "said Olsavsky.
He added that the new regulations should be interpreted as "guarantee that they will not have unintended consequences".
"We are very pleased with the long-term prospects in India and the good work of both Indian customers and Indian sellers." The new regulations must be interpreted … must be ensured so that they do not have unintended consequences, " did he declare. said.
On Thursday, a spokeswoman for Amazon said the company would continue to work with the government to seek clarification.
Small traders have complained in the past that the significant discounts offered by e-commerce companies were harming their businesses. Various dealer organizations had also alleged that these entities provided preferential treatment to certain vendors.
Amazon and Flipkart both lobbied extensively (directly, as well as through badociations and professional organizations) with government authorities for additional time after announcing the proposed changes in December. .
They had also written to the government asking for more time to understand the details of the new framework.
According to a report by Crisil, around 35-40% of sales in the online retail industry – in the range of Rs 35,000-40,000 crore – could be affected due to tougher standards. However, smaller players, such as Snapdeal and ShopClues, have welcomed this development, saying it would create a genuine and robust e-commerce sector in India.
Industry observers said Flipkart and Amazon were very hopeful the government would soften its stance, but given the scale of the investments involved, these companies had already begun fine-tuning their partnerships in case the deadline would not be extended.
Amazon had made an investment of more than $ 5 billion, while Walmart made its biggest bet by injecting $ 16 billion into 77 percent of Flipkart's capital.
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