Amazon.com Inc.'s Indian food-only retail business could halt sales on the e-commerce giant's local online marketplace as the Indian government implements new e-commerce rules in the country, The Economic Times (India) reported Jan. 15, citing people familiar with the matter.
Starting Feb. 1, e-commerce companies operating in India will be prohibited from selling affiliates' products. The new policy, which expands on foreign direct investment guidelines for e-commerce companies in India, also prohibits companies from making exclusive deals with select merchants.
Amazon Retail India Pvt. Ltd. secured the rights to operate an online grocery service in the country in July 2017. Prior to the Department of Industrial Policy and Promotion's approval, Amazon was reported to have earmarked $500 million for the project according to a report by The Wall Street Journal in March 2017.
An Amazon spokesperson said the company is still reviewing the new guidelines but is committed to investing in India, according to The Economic Times report.
The launch of the food retail business, initially planned to coincide with the Diwali festival, faced a delay in 2017 after the government mandated the company to keep its marketplace model and food retail businesses separate, according to a separate report by the newspaper in November 2017.
The business was officially launched in February 2018 with a pilot in Pune.
However, the unit halted operations in April 2018 after the government reiterated its order for Amazon to separate its food venture from its other e-commerce businesses.
The newspaper also reported earlier that Amazon, along with other online retailers in the country, including Walmart Inc.-owned Flipkart Online Services Pvt. Ltd., sought an extension to the Feb. 1 deadline.