Amazon’s takeover of Cloudtail violates India’s FDI rules, says The Confederation of All India Traders (CAIT) . As per CAIT , the acquisition of 76 per cent stake of Narayana Murthy-led Catamaran Ventures in Prione by Amazon will convert the latter from a marketplace to an inventory-based platform, which is a violation of the FDI policy.
CAIT said that, the acquisition of 76 per cent stake of Narayana Murthy-led Catamaran Ventures in Prione by Amazon will convert the latter from a marketplace to an inventory-based platform, which is a violation of the FDI policy.
Amazon has sought the nod of the Competition Commission of India (CCI) to acquire Catamaran Venture’s stake in Prione, according to a statement released on Wednesday.
Prione Business Services Pvt. Ltd., the joint venture between Catamaran and Amazon, will be acquired by Amazon subject to requisite regulatory approvals. On August 09, 2021, the Partners had announced their decision to not continue the JV beyond the end of its current term of May 2022,” as per a joint statement.
CAIT National President BC Bhartia and Secretary General Praveen Khandelwal said in a joint statement that Prione is a subsidiary of Amazon Asia Pacific Holdings (“Amazon Asia”), Singapore (24 per cent) and Catamaran Ventures (76 per cent) and wholly owns Cloudtail India Private Limited (“Cloudtail”), which is among the two largest sellers on the Amazon India marketplace.
Sources said that, “Before 2019, Amazon Asia owned a 49 percent stake in Prione; however, to comply with the new FDI Policy, Amazon Asia’s stake in Prione was decreased to 24 percent.” The definition of “Group Firm” was changed in the FDI Policy of 2020 to include any company with more than 26% voting rights and the ability to appoint more than 50% of the Board of Directors. To avoid government interference, Amazon Asia reduced its stake from 49 percent to 24 percent. According to an official statement, “the FDI Policy restricts FDI to 51 percent in multi-brand retail trade (“MBRT”) and only permits it in single-brand retail trade (SBRT) and wholesale dealing.”
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