Regulators in India are
investigating whether Amazon.com Inc may have circumvented restrictions placed
on foreign investors by selling directly to domestic consumers, The Wall Street
Journal on Friday, 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
Journal. Amazon was not immediately available for comment. The Seattle-based
e-commerce company makes its money in India by charging third-party suppliers
to use its website to sell some 17 million different products, from books to
electronics. Asia’s second-largest country is seen as strategically important
to Amazon as it tries to ramp up growth and profits. 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 try and take on local
competitors. Indian investigators are also examining whether Amazon exerts
control over the prices of products sold on its website, one of the Journal
story’s sources said. “An ideal marketplace should not have any interference
from the platform operator,” the newspaper cited the person as saying.
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