KOLKATA | NEW DELHI: Amazon India ’s largest merchant Cloudtail has almost stopped selling mobile phones to comply with foreign investment norms that prevent a single seller from accounting for more than 25% of a marketplace’s total sales, said four industry executives aware of the development.Mobile phones, or more specifically smartphones, constitute the largest category for ecommerce and being both a high-value and a volume segment contribute a significant portion of Cloudtail’s revenues. As a first step, Cloudtail has already stopped selling newly launched smartphones.Cloudtail is a joint venture between Amazon Asia and Infosys founder Narayan Murthy ’s personal investment vehicle Catamaran.Top brands such as Samsung and Apple are now sold by newer sellers who are getting priority display at Amazon as compared to Cloudtail.The executives aware of the development said Cloudtail will now play a strategic role of a ‘category builder’ for Amazon India with focus on future growth segments like FMCG , lifestyle products and consumer electronics. Since these products have much lower unit value as compared to smartphones, the merchant will be able to comply with the cap suggested in the FDI norms. “The easiest way for Cloudtail to comply with the FDI norms is to move out of high-value categories, especially smartphones, which is estimated to contribute more than half to its revenues. The process has started and Cloudtail is currently liquidating existing stock and has stopped sourcing mobile phones,” said a leading seller at Amazon India.While handset makers earlier used to bill their products and inventory directly to Cloudtail, they have now been directed to bill them to Amazon Wholesale (India) Pvt Ltd, an affiliate of Amazon.com Inc. An email sent to Amazon did not elicit any response.