The parent company of Amazon and its India’s largest seller Cloudtail has decided not to continue their joint venture after May 2022, hours after India’s Supreme Court ruled that the U.S. e-commerce company and Walmart’s Flipkart must face an antitrust investigation in the South Asian market.
Billionaire NR Narayana Murthy's Catamaran (parent company of Cloudtail) and Amazon formed a joint venture in the country in 2014. The joint venture reorganized its ownership in 2019 after India’s regulatory reforms – more on this later.
This progress comes after India’s Supreme Court ruled earlier in the day that Amazon and Flipkart must be held after the country faced an antitrust investigation against them.
Indian regulator, the Competition Commission of India, ordered an investigation into the companies that were suspected of promoting select sellers (sellers who hold stakes) on their e-commerce platforms and using commercial practices that stifle competition.
The two companies said in a statement Monday that Cloudtail, registered as Prione Business Services, enables more than 300,000 sellers and entrepreneurs to access the Internet and provides digital payment capabilities to 4 million merchants. They said the joint venture helped businessmen and small businesses reach millions of customers in India.
Cloudtail is one of the largest sellers on Amazon in India. The e-commerce group owns more stakes in third-party sellers, including Appario Retail, a joint venture with Patni Group.
Catamaran President MD Ranganath said in a statement: “As our joint venture term ended with Amazon, I reviewed this successful partnership, which introduced the power of digitalization and supported hundreds of thousands of small and medium-sized enterprises in towns and towns.” .
The two companies did not say why they decided to end the joint venture.
India’s long-standing laws restrict Amazon and other e-commerce companies from holding inventory or selling goods directly to consumers. To bypass this, the company operates by establishing a maze of joint ventures with local companies operating as inventory holding companies.
India began fixing the vulnerability at the end of 2018, a move widely seen as the biggest fight against the US company in the country at that time. Amazon and Walmart-owned Flipkart are scrambling to remove hundreds of thousands of items from their stores and invest in affiliates in a more indirect way.
In June this year, India proposed stricter e-commerce rules, including banning Amazon, Flipkart and other e-commerce companies from operating their in-house/private brands. The new proposal requires e-commerce companies to ensure that neither their affiliates nor affiliates are listed as sellers on their platform that sell directly to customers.
“Amazon and Catamaran formed a joint venture in the early days of Indian e-commerce, with a shared vision to transform hundreds of thousands of small businesses and the world in a rapidly changing digital world by providing online capabilities to enable them to access their customers in India,” said Amit Agarwal, Amazon India’s senior vice president and country director, in a statement.
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