In a development that could bring global e-commerce giant Amazon's business practices in India under closer regulatory scrutiny, its joint venture with Catamaran Ventures, the private investment arm of Infosys co-founder N R Narayana Murthy, is owner of a firm which in turn is a vendor on its India marketplace, according to a report by Mint citing documents filed by the company to a Registrar of Companies (RoC).
Current FDI norms do not allow foreign investment in e-commerce even as FDI in marketplaces, which offer a platform to help other vendors sell online, is permitted. The JV in which Amazon is a significant minority partner and is selling directly on the platform could put it under scanner for possible violation of FDI norms in the sector.
Indeed, previous media reports suggest Enforcement Directorate had been investigating Amazon as well as others like Flipkart for violating the norms.
Earlier, Flipkart separated ownership of its previously in-house vendor WS Retail to comply with FDI norms. WS Retail, which is now one of the vendors on Flipkart.com marketplace, is jointly owned by Rajiv Kuchhal, an angel investor and former COO of OnMobile, besides some employees of Flipkart. Since the employees are not directly related to Flipkart founders they do not constitute 'group' and hence are in conformity to the investment norms in the sector.
Amazon is also separately facing scrutiny from state tax authorities in Karnataka.
According to the report, Amazon's 49:51 JV with Catamaran Ventures, which was christened as Taurus Business & Trade Services Pvt Ltd has been renamed as Prione Business Services. Prione owns a company named Cloudtail India Pvt. Ltd which sells products such phones, shoes and some exclusive Amazon merchandise on Amazon.in under the seller name Cloudtail.
An email query sent to Amazon for more clarity fetched no response till the time of publishing this article. In a statement issued by Prione, the firm said, Cloudtail is a 100 per cent owned Indian subsidiary of Prione Business Services Pvt Ltd and is an 'independent arm's length seller on the platform'.
It added that Prione Business Services is a joint venture between Catamaran Ventures and Amazon Asia in which Catamaran is a 51 per cent majority shareholder (Catamaran is a 100 per cent Indian owned family office which invests in early stage and mature companies). "The JV was set up earlier this year to enhance IT capabilities and services for small and medium sellers across the country. The entity is currently operational in over 10 cities and towns in India and has already enabled over 3,000 sellers across the country to get online and drive advantages of the emerging digital economy," it said.