Last week, Indian Prime Minister Narendra Modi put regulation into effect targeting large foreign retailers such as Amazon (AMZN  ) in the Indian market with the goal of reducing their power and protecting local businesses.

Amazon has bypassed that threat by selling a large portion of its stake in local venture partner Cloudtail, a move that will now allow it to unfreeze around 300,000 previously-suspended product listings that could have seriously threatened sales.

Amazon sold 25% of its stake in Cloudtail to Prione Business Services Pvt, a corporation owned and operated by prominent billionaire Narayana Murthy's Catamaran Advisors. As a result, Prione owns 76% of Cloudtail, as opposed to 51%.

"Catamaran has always been 100% compliant with every law of our country, India. We will continue to do so in the future," said Catamaran CEO Abishek Laxminarayan in a statement. Catamaran has vowed to remain compliant with the laws going forward.

Despite this, The Confederation of All India Traders (CAIT) claims that the Cloudtail move is an indirect violation of the regulations and should be subject to more scrutiny. They have conventionally been against big e-commerce players like Amazon and Walmart (WMT  ), advocating for local businesses and trade.

"We have no equity participation in any seller company on our marketplace," Amazon said in a statement.

Only 10% of the Indian retail market consists of large chains. International e-commerce sellers have been criticized for abusing monopoly power to oust traditional mom-and-pop stores. If such stores are negatively affected, repercussions could be dire for the local economy, which is primarily fueled by regional growth and a fragmented, decentralized retail industry.

"Despite the recent changes in regulations, we remain optimistic about the country," said Dirk Van den Berghe, executive vice president and regional CEO of Walmart Asia and Canada.