Amazon has reportedly put its plans on hold to acquire a certain stake in India’s retailer Future Group.
The decision follows the new foreign direct investment (FDI) rules on online marketplaces that took effect on 1 February.
Announced in December, the new FDI rules ban online marketplaces from selling goods of companies in which they own stakes.
The norms bar e-commerce companies from giving any preferential treatment to any supplier.
Sources familiar with the development were quoted by Business Standard as saying that Amazon is reassessing its plan and the risks involved due to the new FDI guidelines.
Amazon is also evaluating stake buy plans in Aditya Birla Retail Limited (ABRL) owned More retail chain. The sources told the publication that the company will go ahead with the purchase only after it gains more clarity of the rules from the government.
Sources were quoted by the newspaper as saying: “There were talks happening for almost the whole of last year. Things were moving as planned and Amazon was to close the deal in the first quarter of 2019.”
Amazon had prepared a $2bn investment to buy stakes in a number of retail chains in a bid to expand its offline presence in the country, according to the sources.
The company signed a term sheet with Future Group in August to acquire a minority stake for up to $700m.