Amazon might have just hit a regulatory roadblock in India

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If there’s one company with a globalizing strategy, it’s Amazon. The online retailer has grown at a breakneck pace over the last several months, adding fashion lines, live entertainment, and even its own fleet of airplanes to its ever expanding empire. But now, the Seattle-based firm has hit a somewhat unexpected roadblock in a major market — India. According to recent reports, Amazon may be in violation of some of the second most populous country’s e-commerce rules. Late in March, Indian officials implemented new regulations to pricing and sales sources with little to no warning, which means that Amazon and other similar sites are not currently compliant.

Among the new rules includes a stipulation that no single seller can account for more than a quarter of sales in an e-commerce marketplace. This is a huge problem for Amazon, whose top seller accounts for between 40 to 50 percent of sales in India. The bigger problem at hand, however, would appear to be the lack of time Amazon has been given to make adjustments with respect to India’s new rules. In a statement, Amazon spokesperson Craig Berman said, “Through our amazon.in marketplace, we will continue to help small and medium businesses in India connect with consumers.”

Third party analysts also appear frustrated by the way in which India has chosen to go about enforcing its new legislation. “They’ve not given any timeline for enforcement,” said Satish Meena, an analyst at Forrester Research in India, in an interview with the New York Times. “There’s no proper instructions to companies about how to implement these things. That’s a very open-ended question the government has left.”

The Indian market, however, is not one that Amazon or any online retailer can afford to lose. Forrester Research suggests that online spending in the country could jump to almost $75 billion by 2020, over six times the $12.1 billion the country spent last year. But as a greater proportion of the 1.25-billion strong population gains access to the Internet, it’s only a matter of time before e-commerce truly booms in the southeast Asian country.

And that makes it all the more important for Amazon to be in the game early.


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