On Thursday, Amazon asked the Indian government not to change the rules for foreign investment in e-commerce until investigations into its business practices are completed, two people familiar with the discussions told Reuters.
The Ministry of Commerce met with e-commerce players following allegations by traders who are a key part of the Prime Minister Narendra Modi support base, this Amazon and At Walmart Flipkart creates complex structures to circumvent federal rules on foreign investment and harm retailers.
Both companies deny any wrongdoing and say they are helping small businesses in India.
New Delhi has been considering reviewing the rules for foreign investment in e-commerce for weeks. The last time they were replaced, in 2018, it forced Amazon and Flipkart to redesign their business structures and worsened trade relations between India and the United States.
Last month’s Reuters report, based on internal Amazon documents, revealed that the American company has for years provided preferential treatment to a small group of sellers on its platform by providing them with reduced fees and helping a person enter into special deals with large technology manufacturers.
Amazon said it “does not provide preferential treatment to any seller in its market” and that it “treats all sellers in a fair, transparent and non-discriminatory manner.”
During Thursday’s meeting, Amazon’s chief executive told Commerce Department officials that India’s Competition Commission (CCI) and the Enforcement Directorate were investigating the allegations and “it would be premature to make any policy change” until these proceedings are completed, two sources with direct knowledge of the discussions said.
The antitrust observer said Reuters history confirmed the evidence it had against Amazon, while the federal agency for the fight against financial crime sought information and documents from Amazon.
Amazon, which said it complied with all laws during the meeting, said any policy change affecting current investment would lead to confidence and sentiment among global investors, and any interruption caused would have “devastating consequences” for suppliers and small businesses. business, the sources added.
During the meeting, Flipkart also called for political stability, said one of the two sources.
Amazon told Reuters in a statement that it welcomed the process of consulting with the government and foreign investment policy “should be stable and predictable for investor confidence.” Flipkart declined to comment.
Meanwhile, the retail Reading, led by the richest man in India Mukesh Ambani, called on the government to clarify the policy, saying that complex legal structures have been used by some companies to circumvent the rules, a third source said.
Reliance declined to comment.
As a local player, Reliance is not limited by rules that prohibit companies such as Amazon and Flipkart from owning inventory sold through their local websites.
The rules also place other restrictions on foreign players battling Reliance as it expands its e-commerce operations.
© Thomson Reuters 2021
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