The Confederation of All India Traders (CAIT) has stated that Amazon’s acquisition of Cloudtail’s parent company, Prione Business Services Private Limited, will “violate the country’s Foreign Direct Investment rules.”
According to the CAIT, Amazon’s purchase of a 76% share in Prione from Narayana Murthy’s Catamaran Ventures will change the latter from a marketplace to an inventory-based platform, which is a violation of the FDI regulation.
According to a statement made on Wednesday, Amazon has applied for permission from the Competition Commission of India (CCI) to buy Catamaran Venture’s interest in Prione.
“Amazon will purchase Prime Business Services Pvt. Ltd., a joint venture between Catamaran and Amazon, subject to regulatory approvals.” “On August 9, 2021, the Partners announced their decision not to extend the JV beyond its present term of May 2022,” according to a press release.
“Amazon will buy Catamaran’s Prione interest, including all assets and liabilities, following applicable law.” The Joint Venture’s operations will continue under present management, and if regulatory clearances are received, Prione & Cloudtail’s board of directors will take steps to complete the transaction following applicable requirements,” the statement stated.
“Before 2019, Amazon Asia owned a 49 percent stake in Prione; however, to comply with the new FDI Policy, Amazon Asia’s stake in Prione was decreased to 24 percent.” The definition of “Group Firm” was changed in the FDI Policy of 2020 to include any company with more than 26% voting rights and the ability to appoint more than 50% of the Board of Directors. To avoid government interference, Amazon Asia reduced its stake from 49 percent to 24 percent. According to an official statement, “the FDI Policy restricts FDI to 51 percent in multi-brand retail trade (“MBRT”) and only permits it in single-brand retail trade (SBRT) and wholesale dealing.”