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Do New Indian Gov’t Regulations Threaten Amazon?

In Global Trade Talk by Alex Mutter

By Alex Mutter

LiveMint reports that the Indian government has created new business regulations that have the potential to hit foreign retailers hard.

Amazon only launched its Kindle in India last month, but it might be short-lived.

The first of the new regulations states that single-brand and multi-brand retailers must, averaged across their first five years in India, acquire at minimum 30% of their supplies from Indian companies. After those first five years, retailers must meet that 30% minimum in all subsequent years.

Much more problematic is the second regulation, which bars any company with foreign investors from selling their products over the internet in India at all.

This effectively stops Amazon, or any other foreign e-commerce firm, from operating in the country, and it remains to be seen whether the Kindle Store, which launched in India only a month ago, will still be able to do business. Equally unclear is the fate of Junglee, Amazon’s Indian subsidiary. Though it does not technically sell anything by itself, it does act as something of a hub for connecting Indian consumers with products sold by Amazon.

Should these regulations hold, it will be interesting to see not only Amazon’s response but also how other companies with interest in the Indian e-book market, such as Kobo and B&N, approach the situation.

About the Author

Alex Mutter