Amazon has just sent a legal notice to Future Group for breaching the terms of its contract after a recent deal with Reliance Retail. The second largest Indian retail chain received the notice for selling a portion of its business to the Ambani owned retail chain.
Back in August 2020, Future Group announced that it was selling off its retail and wholesale operations along with its logistics and warehousing business to Reliance Retail for 3.4 billion US Dollars. Although, Future Group already had a deal with Amazon, before the Reliance Retail deal came into play. The e-retail giant had acquired a 49 percent stake in Future Coupons, a subsidiary of Future Group’s real estate business, back in 2019.
The deal also gave Amazon a 3.58 percent stake in Future Retail and right of first refusal to purchase more stake in Future Retail as well. According to a TechCrunch report, local news networks reported on the legal notice, which arrived as Amazon and the Indian firm had a deal that would restrict the Indian firm from entering into a deal with certain other firms.
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The legal notice also arrives amid rumors of Amazon planning on acquiring a multi billion dollar stake in Reliance Retail as well, which is India’s largest retail chain at the moment. Currently, the online retailing segment only accounts for 3 to 7 percent of the total retail sales in the country. Thus, with Reliance Retail launching its own e-commerce business in the region, Amazon and Flipkart would face stiff competition in the market.
Industry analysts have stated that retail is crucial for the future of American e-commerce firms in India. Amazon arrived in the country seven years ago and has since invested more than 6.5 billion US Dollars in the local business. The e-commerce giant has also confirmed that it has filed a legal notice but has refrained from divulging any additional information at the moment. So stay tuned for more updates.
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