As per India’s FDI in e-commerce norms, marketplaces are forbidden from following an inventory model
E-commerce major Amazon India is set to sell its stake in Appario, the largest seller on its platform, to Vinod Poddar group promoted Clicktech, which is also a seller on the marketplace, as per media reports.
VCCircle was the first to report the development on Wednesday.
Amazon partly owns Appario through Frontizo Business Services Pvt., a joint venture between the US behemoth and the Patni Group-owned Zodiac Wealth Advisors LLP.
Amazon will fully acquire Appario’s parent firm Frontizo Business Services from the Patni Group as part of the expected deal.
Once the transaction is done, while Frontizo will become a wholly-owned subsidiary of Amazon, Appario will be owned by Clicktech.
In April 2022, the American e-commerce company divested its stake in Cloudtail, another largest seller on its platform to stay compliant with foreign direct investment (FDI) norms in e-commerce. Marketplaces are online retail areas, where India allows 100% foreign ownership, yet such platforms are restricted from holding and selling their merchandise and are allowed to only act as a neutral platform for facilitating other businesses and sellers.
As per Press Note 2 OF 2018, the inventory of a vendor is deemed to be controlled by an e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.
Cloudtail was a joint venture between Amazon and Catamaran Ventures, promoted by Infosys founder NR Narayana Murthy.
Clicktech has been a seller on Amazon India since May 2022. The company is looking to scale by expanding offerings on the marketplace and hence has decided to buy the Appario business which moves considerable volumes on the marketplace.
Frontizo and Appario will continue to operate under the leadership and control of their management pending the regulatory approval process, an Amazon spokesperson told the media.
