India modified foreign direct investment rules for its burgeoning e-commerce sector.
India’s revised e-commerce rules caused widespread disruption on Amazon’s India website when they kicked in on Friday, forcing the company to take down its key grocery service and remove a wide range of products such as sunglasses and floor cleaners. The products began to disappear from Amazon India late on Thursday as it began complying with the regulations before a midnight deadline.
In December, India modified foreign direct investment rules for its burgeoning e-commerce sector. The new rules bar online retailers from selling products via vendors in which they have an equity interest, and also from making deals with sellers to sell exclusively on their platforms.
Numerous items sold by Amazon vendors such as Cloudtail, in which Amazon holds an indirect equity stake, were no longer available on its India site. Amazon Pantry, a grocery service primarily managed by company affiliates, was also discontinued, though grocery products could be purchased individually.
“Pantry is completely empty, how I am suppose to grocery shop,” Twitter user Pamela wrote on the social network. “Whatever government rules are, (I) don’t care, you guys fix it, I need to shop.”
The situation in India is “a bit fluid right now”, but the country remains a good long-term opportunity, Amazon chief financial officer Brian Olsavsky said. The company’s main goal was to minimise the impact of the new rules on customers and sellers, he added.
Flipkart CEO Kalyan Krishnamurthy warned last month that it faced “significant customer disruption” if the new rules were implemented from February 1. On Friday, the company said it was disappointed the government acted in “haste”, but assured compliance.
“We are committed to doing everything we can to be compliant with the new rules,” Flipkart India executive Rajneesh Kumar said in a statement, without explaining how the website was impacted.