Amazon Begins Pulling Products From Its India Site as Local Government's Strict New Policies Go Into Effect

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.

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