Amazon India’s Cloudtail stops selling mobile phones to comply with FDI norms

Smartphone is one of the high-value categories for e-commerce platforms like Flipkart, Amazon and Snapdeal. However, the government’s new FDI regulations are going to affect their high value and volume segment, if they are handled by a single large seller on the platform.

According to the latest government FDI norms, a single seller on any marketplace platform cannot account for more than 25 percent of the total sales.

Taking the new rule into considering, Amazon India has already stopped selling newly launched smartphones through Cloudtail, its largest merchant, according to ET report. Newer sellers are getting priority display now on Amazon as compared to Cloudtail.

Cloudtail is a joint venture between Amazon Asia and Infosys founder Narayan Murthy's personal investment vehicle, Catamaran Ventures.

Citing sources, ET reported that the process has started and Cloudtail is currently liquidating existing stock and has stopped sourcing mobile phones.

However, in order to grow other categories on the platform, Cloudtail will be focusing more on comparatively low-value categories such as FMCG, lifestyle products and consumer electronics to comply with the cap suggested in the FDI norms.