Coudtail, Appario model business by Ecommerce companies, threat evaded.
The law is made, but they found perfect way to surpass

Why such restructuring was necessary? On December 26 the government issued a circular prohibiting the marketplace and their group companies from equity participation in any of their sellers or control over inventory, affecting Amazon and Flipkart the most. They were operating through such system to dominate the retails marketplace and to some extent monopolistic and restrictive trade practices.
E-commerce marketplaces supposed to provide equal playing platforms for all retailers across the world, to enable the customer to have choices and retailers to reach customers without any geographical boundaries. E-commerce landscapes are going through a tough phase. FDI regulations does not allow Foreign Direct Investments in inventory based e-commerce to consumers. That means e-commerce companies who want to list their products in e-commerce marketplaces cannot expect FDI. However it allows FDI in marketplaces where independent sellers can list and sell goods. Retailers are alleging that e-commerce giants are violating rules and actually holding their own stock and selling at deep discounts.
Case of Cloudtail and Appario Catamaran Ventures, NR Narayana Murthy's company was holding 76% stake of Prione Business Services, which is the holding company of Cloudtail. Amazon Asia was holding 49% of the company. According to a 2013 notification of the RBI with regard to FDI in India, 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% of the members of the board of directors in the other enterprise. In the above case Cloudtail fits in to the definition of group company and Amazon can not allow Cloudtail to use its marketplace to sell the products. Appario is a subsidiary company of Frontizo, a joint venture between Patni Group and Amazon Asia Pacific Holdings. Patni Group was holding 51% stake and Amazon Pacific Holdings 48%. The restructuring was necessitated due to the new norms announced , which prohibits marketplaces and their group companies from equity participation in any of their sellers or control over inventory, affecting Cloudtail and Appario the most, They stopped selling on Amazon on February 1st.
