Amazon’s stake acquisition in Future Retail is back on track, likely to be announced next month

Amazon’s attempts to acquire a minority stake of 10 per cent in Future Retail for about ₹ 2,000 crore, that began in early 2018, is back on track after encountering a hiccup in the form of changes to FDI norms for e-commerce companies announced by the Government last December, and which came into effect from February 1. Last year, founder and CEO of Future Group, Kishore Biyani had declared that he will sell a minority stake to the strongest global retailer. However, he did not divulge the name of the retailer.

Both Amazon and Future Retail are currently working towards coming up with a deal structure that complies to the draft national e-commerce policy that was introduced by the Government on Saturday and will be ready to announce it next month, said sources in the know of the deal. Dismissing multiple reports in the media that the Amazon deal had hit a roadblock and was on the back-burner, they said, the deal will most likely be clinched next month, unless another unexpected hurdle comes up again.

At a retail summit in Mumbai on Tuesday, Biyani in response to a question from Bloomberg Quint said that his company has never gone on record about any deal with Amazon, but at the same time, he did not rule out any such possibilities in the near future. On whether e-commerce regulations will only favour domestic players such as Reliance and Future Group, Biyani said, e-commerce marketplaces are back on track as they have worked around the policy, so there is no problem at all, adding that “Online is a great way of offering to a much wider audience, we are doing the same with Tathastu.”

Gopal Pillai, Director and General Manager of Seller Services at Amazon India in an interaction with BusinessLine early last week said “We have been compliant from day one (Feb 1).” This despite the fact that the e-tailer had asked for a 4-month extension to comply with the new FDI in e-commerce rules announced last December.

Stating that since the extension was not granted by the Government, Amazon did everything to comply in double quick time, Pillai said “In the last three weeks since the regulations came into effect, nothing has changed for Amazon, both from the customer perspective and seller registrations perspective. We have no equity participation in any of the sellers on our marketplace and none of the sellers on our marketplace buy over 25 per cent of their inventory from our wholesale business.”

According to Pillai, Amazon has grown its seller base from 4 lakh last year to 4,50,000 today, its global seller base from 35,000 last year to 50,000 today and its work with 17 partners has an outreach that extends to over one lakh women entrepreneurs.

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