Amazon’s India retail under lens

Regulators in India are investigating whether Amazon may have circumvented restrictions...

By: Reuters | San Francisco | Published:September 7, 2014 12:05 pm
Amazon.com is allowed to operate there because it acts as a marketplace rather than a retailer. (Reuters) Amazon.com is allowed to operate there because it acts as a marketplace rather than a retailer. (Reuters)

Regulators in India are investigating whether Amazon may have circumvented restrictions placed on foreign investors by selling directly to domestic consumers, The Wall Street Journal said, citing unidentified sources.

The finance ministry’s Enforcement Directorate is looking into whether Amazon.com’s local subsidiary may have sold directly to customers, but made it look as if the sales were made by other companies, the Journal report said, quoting two people familiar with the matter.

India does not allow foreign firms to own majority stakes in retail companies that sell more than one brand. Amazon.com is allowed to operate there because it acts as a marketplace rather than a retailer, according to the report.

Amazon was not immediately available for comment.

The Seattle-based company makes its money in India by charging third-party suppliers to use its website to sell some 17 million different products. Amazon.com has said it plans to invest $2 billion more in India, where it has slashed prices, ramped up marketing and accelerated warehouse construction to take on competitors. Investigators are also examining whether Amazon exerts control over the prices of products sold on its website, one of the story’s sources said.

“An ideal marketplace should not have any interference from the platform operator,” the newspaper cited the person as saying.

$2-bn credit facility

Amazon.com secured a $2-billion credit facility, which could give CEO Jeff Bezos more leeway to boost the web retailer’s investments in new businesses, Bloomberg said. The credit agreement with Bank of America is for two years and could be extended for another three with approval.

Video of the day

For all the latest Business News, download Indian Express App

    Live Cricket Scores & Results