Amazon may not extend its joint venture with Patni group, Appario Retail Private Ltd, after 2022. The joint venture was for a five-year period which expires next year.
“In order to declutter its regulatory issues in India, and in the backdrop of the backlash Amazon is facing with its joint ventures, the company is mulling to not renew the joint venture, Appario,” said a source.
Appario Retail sells goods across segments such as smartphones, electronics, and other items. It is a wholly-owned subsidiary of Frontizo Business Services Private Limited that was incorporated in 2017. Frontizo is a joint venture between Patni's family and Amazon Asia Pacific Resources Private Limited.
“Meanwhile, Amazon’s representatives have been sitting across the table with the Ministry of Commerce to address the issues that were pointed out,” the person said, requesting anonymity.
Cloudtail venture
Amazon recently announced that from May next year its Cloudtail joint venture with NR Narayana Murthy’s Catamaran would cease amid increased regulatory scrutiny. Cloudtail became one of the largest sellers on Amazon by offering over 30 lakh products across multiple categories like books, media, apparel, shoes, furniture, appliances and consumables, among others.
However, in the recent past, Amazon and Flipkart have been facing a lot of backlashes. In August, the Supreme Court had passed an order that Amazon and Flipkart must face anti-trust investigations ordered against them in India.
Last year too, the Competition Commission of India ordered an investigation into the firms for allegedly promoting select sellers, (especially from companies where they have a stake) on their e-commerce portals and using business practices that stifle competition.
Foreign direct investment norms restrict Amazon and other e-commerce firms from holding inventories, selling items directly to consumers or investing in retail chains. However, companies have operated through joint ventures.
Retail in India
The retail industry in India is largely unorganised and dominated by mom-and-pop stores. In order to protect the SMEs and MSMEs, the government seems to be finding ways to curb international e-commerce giants from controlling the online ecoystem.
The Centre is also mulling a new e-commerce policy that could prohibit firms like Amazon and Flipkart from selling their private labels, among other measures.
Amazon, Appario and Frontizo did not respond to BusinessLine ’s query.