Business General News

The deal between Future Retail and Amazon hits a major roadblock

Earlier on Tuesday, 1st January 2019, several sources close to the matter reported that the much awaited Future Retail-Amazon deal has run into an obstacle after Indian authorities made an announcement stating changes to foreign direct investment (FDI) norms for e-commerce companies.

As per reported by sources who opted to remain anonymous, they said that the deal between Jeff Bezos’ Amazon and Kishore Biyani’s Future will require some modifications for it to go through.

As per reports, this latest development is caused due to a series of initiatives taken by the Indian Government back in the previous week wherein it barred e-commerce companies from dealing in products of companies in which they have equity stakes or management control.

As part of the initiative it was also announced that from the 1st of February 2019, the commerce and industry ministry shall prohibit e-commerce companies from entering into an agreement for the exclusive sale of products.

In the case of Future Retail and Amazon, it means that shall the deal go through Amazon would not be able to sell Future Retail goods on its website.

As per reports, this deal could be beneficial for both parties as it would enable Amazon to further strengthen its presence in India as it would be able to challenge its rival Walmart, which just recently purchased majority stakes in online retailer Flipkart and as for Future Retail, the funds provided by Amazon shall fund the company with all the required ammunition to tackle its rivals, both in the online as well as physical world.

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However, sources close to the matter have also reported that this deal has caused a lot of chaos amongst several big market players, who are expecting some sort of clarity over the potential deal structure by the second week of January.

When contacted for a response via an email Future Retail did not give any comments citing that Amazon does not comment on speculations.