The new policies could force significant changes in the India strategies of the retail giants.

The move might stop Amazon competing with independent sellers and end its offerings of proprietary products like its Echo smart speakers in India, its top emerging market.

Walmart spent $16 billion this year to buy 77 percent of Flipkart, India's leading online retailer. The new rules could hamper its strategy of selling clothing and other products under its own private brands and prevent it from using its supply-chain expertise and clout with retailers to drive down prices for Indian consumers.

Prime Minister Narendra Modi of India asked the foreign companies to invest more in the country after his 2014 election victory but they did not really listen and his government has become increasingly more protectionist as his party's re-election prospects have dimmed.

Modi has increasingly sought to bolster Indian firms and curb foreign ones through new policies, including one that requires foreign companies like Visa, Mastercard and American Express to store all data about Indians on computers inside the country.