Flipkart warns of ‘disruption’ if new e-comm curbs not delayed

New Delhi, January 29

Walmart Inc’s online retailer Flipkart has told the Indian government the company faces the risk of “significant customer disruption” if the implementation of new curbs for e-commerce is not delayed by six months, a source told Reuters.

New foreign investment restrictions will, from February 1, bar e-commerce companies from selling products from firms in which they have an equity interest and also ban them from reaching deals with sellers to only sell on one platform.

In a letter to the Industries Department earlier this month, Flipkart chief executive Kalyan Krishnamurthy said the rules required the company to assess “all elements” of its business operations, according to a person privy to the communication.

“Redesigning numerous elements of our technology systems to ensure that we can validate and evidence our compliance, in such a compressed period of time, has caused us to divert significant resources,” Krishnamurthy wrote in the letter. The new curbs were only announced on December 26.

He also said the regulations could cause “significant customer disruption” if the deadline for compliance wasn’t extended. He asked for a six-month delay.

The contents of Flipkart’s letter have not been previously reported. Flipkart declined to comment.

Indian officials have said the government is unlikely to change the policy’s implementation date. The Industries Department declined to comment. 

The policy move has jolted Walmart, which last year invested $16 billion in Flipkart in its biggest ever deal, and Amazon, which has committed $5.5 billion in India investments.

Industry sources have said the new policy would raise compliance costs and force Amazon and Flipkart to review their business arrangements in the country. — Reuters

New guidelines

• From February 1, e-commerce companies are barred from selling products from firms in which they have an equity interest
• The companies are also not allowed to reach deal with sellers to only sell products on one platform only
• The new curbs were announced on December 26