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March 28, 2022

Sea Ltd. is shutting its main e-commerce operation in India just months after its October launch, blaming market uncertainty for scuppering one of its more promising overseas endeavours.

Sea, part-owned by Tencent Holdings Ltd., will be shuttering Shopee India from March 29, though it will continue to handle orders placed before then and support local merchants during the transition. Its other global operations are unaffected, Shopee said in a statement. Sea fell more than 9% in pre-market trading in New York.

The shutdown is another setback for Singapore-based Sea, which has lost two-thirds of its value since an October peak as investors scrutinized its growth prospects. An exit from the e-commerce market of India, a country of about 1.3 billion people, became more likely after its government targeted Sea’s gaming unit, its other main arm, earlier this year.

Sea went public in 2017 and quickly became the most valuable company in Southeast Asia, based on its potential to expand its offering of gaming, e-commerce and financial services beyond its home turf. New Delhi’s decision in February to ban Free Fire -- Sea’s most popular mobile gaming title -- highlighted Sea’s challenges from geopolitical tensions as well as mounting competition from rivals like Alibaba Group Holding Ltd.’s Lazada.

India has banned hundreds of Chinese apps over the past two years, but the expansion of that policy to Sea took management and investors by surprise. The startup was founded by Forrest Li, who was born in China but is now a Singaporean citizen. Sea, which counts Chinese social media giant Tencent as its biggest shareholder, has said the Delhi government’s actions introduced a new layer of uncertainty to its business.

Shopee had about 300 employees and 20,000 local sellers in India in December.

Early this month, the company said Shopee will focus on Southeast Asia, Taiwan and Brazil, and announced the online-shopping arm’s exit from France just months after launching its maiden foray into Europe.

The Confederation of All India Traders, a group of brick-and-mortar retailers, said it welcomed Shopee’s exit from India. “It’s good that saner counsel has prevailed upon Shopee and it’s parent company,” it said in a statement.