Amazon to end partnership with Narayana Murthy's Catamaran Ventures from May 2022

Jeff Bezos

Following harsh criticism from traders associations and politicians for unfair trade practices, leading e-commerce company Amazon has decided to discontinue its partnership with NR Narayana Murthy-owned Catamaran Ventures.

The two companies jointly run Prione Business Services whose wholly owned subsidiary Cloudtail India is one of Amazon's largest sellers in the country.

"The two partners today announced they have mutually decided to not continue their joint venture beyond the end of its current term," Amazon said in a statement on August 9.

Interestingly, the decision came soon after the Supreme Court of India allowed the Competition Commission of India (CII) to investigate Amazon and rival Flipkart for unfair trade practices.

Prione Business Services Pvt. Ltd had been running in India for the past 7 years and the joint venture between Amazon and Catamaran was coming up for renewal on May 19, 2022.

"Amazon and Catamaran entered into a JV in the early days of e-commerce in India with a shared vision of transforming hundreds of thousands of small businesses in a fast-changing digital world, by providing online capabilities enabling them to access  customers both in India and globally,"  said  Amit Agarwal, global senior vice president and country head.

We are humbled by how the JV exceeded its vision, helping online commerce evolve through the unrelenting efforts of hundreds of its employees, positively impacting over 4.3 million small businesses, creating hundreds of thousands of jobs, and contributing to India’s digital economy. We were privileged to have had a partner we could learn from and lean on. I would like to thank the Catamaran team for this long and fruitful partnership that helped set the direction for e-commerce in India," he added.

The development comes at a time when the government is trying to address the burning issues of preferred vendors and online discounting which have marred the growth of offline retailers in India.

In India, e-tailers are known to be having a set of preferred vendors who get a majority of the business generated by these companies.

In 2018, the government had come up with Press Note 2, revising the then-existing Press Note 3. It asked the marketplaces to ensure that they will not sell the products of their group companies on their platforms.

Following the clarification Amazon, which gets majority of its business Catamaran did a rejig in its structure in India.

In February 2019, Catamaran Ventures raised its stake in Prione Business Services. The move reduced Amazon Asia's stake in Cloudtail to 24 percent from the earlier 49 percent, with Catamaran Ventures’ stake rising to 76 percent from 51 percent earlier.

Following this, Cloudtail ceased to be an Amazon group company, making it compliant with the rules on the papers but yet not serving the purpose with which the norms were straightened.

However even as the issue got ironed out on papers, the company kept facing constant criticism from offline traders.

In February,  the Confederation of All India Traders (CAIT) also said that Indian companies were hand in glove with Amazon accusing retail giant Narayana Murthy of  helping the company circumvent Indian laws.

In a letter written to Piyush Goyal, Minister of Commerce and Industry, it also demanded an investigation into the matter.

"....questions are bound to arise for which Cloudtail has to give answers when CCI will investigate Amazon business module. Both Amazon and Cloudtail are two faces of a single coin as far as activities of Cloudtail on Amazon e commerce platform is concerned," said Praveen Khandelwal, general secretary, CAIT.

Last month even Commerce and Industry Minister Piyush Goyal said the companies should refrain from forum shopping and let the CCI investigate if they were doing an honest business.

"We are happy that Prione has leveraged global best practices for e-commerce in India, created jobs, and provided millions of Indian customers access to a wide selection of products from across the country by leveraging technology. As our JV with Amazon reaches the end of its tenure, I reflect on this successful partnership that introduced the power of digitization and empowered hundreds of thousands of SMBs across big and small towns. We would like to thank Amazon for the partnership that leaves behind a strong legacy of shaping e-commerce in India," said M.D. Ranganath, President,  Catamaran.