Amazon urges India not to change e-commerce investment rules

Amazon on Thursday asked the Indian government not to change e - commerce foreign investment rules until an investigation into its business practices is concluded, Reuters reported .

The commerce ministry met e-commerce businesses after retailers accused Amazon and Walmart's Flipkart of setting up complex structures to circumvent federal foreign investment rules and harm small traders.

But both companies deny any wrongdoing and say they are helping small businesses in India.

New Delhi has been considering revising e-commerce foreign investment rules for weeks . They were last changed in 2018, forcing Amazon and Flipkart to restructure their businesses, which damaged trade relations between India and the United States.

Last month, a Reuters report based on internal Amazon documents revealed that the U.S. company has for years given preferential treatment to a small group of sellers on its platform, offering them discounted prices and helping them cut special deals with big tech manufacturers.

Amazon said it does not give preferential treatment to any seller on its marketplace, but instead treats all sellers in a fair , transparent and non-discriminatory manner.

In a meeting on Thursday, the Competition Commission of India ( CCI) and the Enforcement Directorate said they were probing the allegations and said it would be premature to make any policy changes until the investigation is concluded .

The antitrust regulator said the Reuters report confirmed its allegations against Amazon, and the federal financial crime-fighting agency has requested information and documents from Amazon.

Amazon said at the meeting that it would comply with all laws, but any policy changes that affected current investments would undermine the confidence of global investors, and any disruption would have devastating consequences for suppliers and small businesses.

Flipkart also called for policy stability during the meeting , one of the two sources said .

Amazon told Reuters in a statement it welcomed the government’s consultation process and that foreign investment policy needed to be stable and predictable to boost investor confidence.

Meanwhile, the retail arm of Reliance Industries, led by India's richest man Mukesh Ambani, urged the government to clarify the policy, saying some companies used complex legal structures to circumvent the rules .

As a domestic company, Reliance is not constrained by rules that prohibit companies such as Amazon and Flipkart from owning inventory sold through their local sites .

Finally, the new rules impose other restrictions on foreign companies , setting them up for a battle with Reliance as it expands its e-commerce business .

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