By Aditya Kalra and Sankalp Phartiyal
NEW DELHI / MUMBAI (Reuters) – The Ecommerce Rules That Implied in India Friday caused widespread disruption to Amazon.com (NASDAQ :), forcing it to take down a lot of goods from its India website, including echo sounders, batteries, and floor cleaners.
Two sources of direct knowledge of the matter said the products began to disappear from the Amazon India website late Thursday when it began to comply with the revised standards before the midnight deadline.
"The company has no choice, they meet compliance requirements … customers will suffer," one of the sources said.
In December, India modified the foreign direct investment (FDI) rules for its growing e-commerce sector, which has made huge efforts not only from Amazon.com, but also from Walmart (NYSE: Inc), which was bought this year a majority share in the domestic e-commerce player Flipkart.
India's new e-commerce investment rules offered online stores to sell products through vendors where they have an equity interest and also to make deals with sellers to sell solely on their platforms.
On Thursday, it was no longer available on the Amazon India site in many articles sold by vendors such as Cloudtail, where Amazon has an indirect stake.
Clothing from Indian warehouse chain Shopper's Stop was no longer available, as Amazon owns 5 percent of the company.
Amazon's own range of Echo speakers, Presto-branded home cleaners and other Amazon Basics products such as chargers and batteries, had also disappeared from the website.
Both Amazon and Walmart had lobbied against the latest rules and pushed for a delay in their execution, but India said late on Thursday that the deadline stood.
The situation in India is "a little fluid right now", but the country is still a good long-term opportunity, said Amazon Finance Director Brian Olsavsky on a conference call with journalists following fourth-quarter revenue announcement.
The company's main goal is to minimize the impact of the new e-commerce rules on customers and sellers, he added.
Amazon, which saw record sales and profits in the peak season, has expected sales in the first quarter under Wall Street estimates due to the uncertainty in India ̵
Flipkart CEO Kalyan Krishnamurthy warned last month that it is facing "significant customer disruption" if the implementation of the new rules was not delayed.
On Friday, Flipkart said it was disappointed that the government had decided to implement the regulations in a hurry and added that it would do everything to be compatible.
"We believe the policy should be established in an advisory and market-driven way, and we will continue to work with the government to promote fair growth policies," said Rajneesh Kumar, director and business manager,
The US government also has urged India to protect the investments of the two US dealers, Reuters reported last week.
Both companies have invested heavily on India as a major growth driver: Amazon is committed to investing $ 5.5 billion there, while Walmart last year spent $ 16 billion on Flip charts.
But the Indian Prime Minister Narendra Modi's administration is seen as eager to appetite small traders in the run-up to a general election in May.
Many retailers say e-commerce giants are using purchasing power and controlling inventory from affiliate vendors to create an unfair marketplace where they can offer deep discounts on some products.
Such schemes will be blocked under the new policy.
Industrial sources have said that the new rules will force large e-sellers to change their business structures and increase compliance costs.
Amazon India told Reuters that it was "committed to complying with all of the country's laws," adding that all sellers themselves make their own independent decisions about what to list and when.
Excluding deals with sellers will be discontinued, the two sources said.
It is unclear how long the disturbance will last. Would be buyers of echo sounders on Amazon India saw a message that reads: "We do not know when or if this item comes back in stock."
The effect of the changes on Flipkart was not clear.