Ecommerce companies such as Amazon and Flipkart may not be able to meet regulations imposed by the Indian government limiting any one seller on their platform to 25% of total sales, financial experts say.
Both companies have individual sellers that exceed this threshold. For example, Amazon India subsidiary Cloudtail is one of the biggest sellers on Amazon India.
The government recently relaxed regulations designed to place a cap on overseas investment in Indian companies, but left the 25% cap in place in order to allay fears about foreign dominance of the Indian economy.
“We would not like to speculate on the share of Cloudtail or any other seller till we close our books for the year” an Amazon spokesperson told the Times of India. Amazon said that they intend to put mechanisms in place in order to warn sellers who were in danger of breaching the new limit.
Rival ecommerce platform Flipkart says that it will take measures over the next eighteen months to reduce the contribution of WS Retail, the biggest vendor on its website.
A Flipkart spokesperson said that the company had always complied with all legal requirements, and would continue to do so.
Snapdeal claims that it is already fully compliant with the new regulations. “Snapdeal has nearly 300,000 sellers from across India. Given the span and depth of our seller base, even the bigger ones account for much less than the 25 per cent threshold mandated for any single seller” the company said in a statement.
The Internet and Mobile Association of India (IAMAI) had planned to lobby against the new regulations, but its members were unable to reach a consensus, despite preparing a draft note to issue to the Department of Industrial Promotion and Policy (DIPP).