Cloudtail India is a wholly-owned subsidiary of Prione Business Services. Prione is a joint venture between Catamaran and Amazon. The two partners are going to exit from the business at a time when there is stricter surveillance on the operations of the foreign e-commerce marketplaces in the country.
The two partners have mutually decided to not continue their joint venture beyond the end of its current term ending on May 19, 2022.
Indian rules currently prohibit a foreign entity running a marketplace as well as its group companies from equity participation in any of the sellers or having control over their inventory.
As per the RBI norms of 2013, a group company means two or more enterprises which, directly or indirectly, are in a position to exercise 26% or more voting rights in the other enterprise or can appoint more than 50% members of the board of directors in the other enterprise.
As a result,
Amazon had to reduce its stake from 49% to 24% in Cloudtail and Appario, the two top sellers on its marketplace.
But still, Amazon has been under spotlight from various government bodies and offline retail trader bodies who claim the marketplace flouts FDI rules through such indirect stake in seller entities.
Cloudtail had an overarching presence in the Amazon India marketplace in multiple categories like smartphones, electronics and fashion. However, it has off-late reduced focus on fast-selling categories like smartphones and instead has been focusing on electronics and daily necessities.
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