Under Fire From Traders And Regulatory Flux, Amazon India & Narayana Murthy’s Catamaran To Shut JV

Amazon India and Infosys cofounder NR Naryana Murthy’s Catamaran run joint venture – Prione Business – will stop its operations  from May 19, 2022 as both the partners have decided not to renew their contract that is coming to end next year. Prione Businesses owns Cloudtail India, one of the largest sellers of Amazon India. 

Prione Business claims to have enabled over 300,000 sellers and entrepreneurs to go online and enabled 4 Mn merchants with digital payment capabilities, providing these SMBs and merchants access to millions of customers across the country.

The development comes on the day when the Supreme Court had given a nod to antitrust regulator – Competition Commission of India to continue its probe into Flipkart and Amazon for alleged anti-competitive practices.  Delhi Vyapar Mahasangh (DMV), a union of micro, small and medium-sized enterprises, had alleged Amazon and Flipkart of favouring certain sellers, exclusive partnership, heavy discounting, and predatory pricing. Several trader associations have earlier accused Amazon of favouring Cloudtail over other sellers. 

“It is now a cover up exercise by Mr Narayan Murthy. The fact that Amazon is violating the law and FDI policy through Cloudtail must have been known to Mr Murthy long before or even at the time of entering into an agreement with Amazon. The question arises as to why Mr Murthy took this much time for taking this decision. Did ever Mr Murthy Called upon to explain as to why the Cloudtail is being used as a preferential seller on Amazon in utter disregard of the FDI policy,” Praveen Khandelwal of Confederation of All India Traders asked. 

He further added that both Amazon and Cloudtail are two faces of a single coin as far as activities of Cloudtail on Amazon ecommerce platform is concerned. 

According to documents sourced from the RoC, Cloudtail India Pvt Ltd had reported operating revenue of INR 11,412.31 crore in the year ended March 2020 (FY20). This was an increase of 27.8% compared to INR 8,940.4 Cr reported in the previous financial year. The company also generated a net profit of INR 67.54 Cr in FY20.

Earlier this year, Cloudtail received a tax notice demand to the tune of INR 54.5 Cr, The Guardian reported on June 14. The report said that Cloudtail has received a show cause notice from the Directorate General of Goods and Service Tax Intelligence which accused the company of evading INR 54.5 Cr in taxes, along with interest and penalties, for service tax-related matters.