Retail giant Walmart may pull out of Flipkart after India’s new foreign direct investment (FDI) norms for e-commerce companies come into effect, US investment bank Morgan Stanley warned.

“An exit is likely but not completely ruled out as the Indian e-commerce market becomes increasingly complex,” Morgan Stanley said in a report late Monday.

According to the report, the Walmart-Flipkart saga could unfold similarly to the events surrounding Amazon in China in late 2017.

“There is a precedent for an exit, as Amazon withdrew from China in late 2017 after realizing the model was no longer working for them,” the report said.

“We estimate that Flipkart generates 50 percent of its revenue from this category, which means that Flipkart could face significant disruption and revenue pressure in the near future,” it added.

The new FDI rules could force Flipkart to remove up to 25 percent of products from its platform, including smartphones and electronics, which account for the bulk of its revenue, Morgan Stanley said.

On February 1, the two companies’ e-commerce business in India was disrupted after the new FDI norms for the e-commerce sector came into force.

The standard prohibited online retailers from requiring companies to sell their products exclusively on their platform.

In the new policy, the Department of Commerce also stated that online retailers would not directly or indirectly influence the selling prices of goods and services and would ensure a level playing field.

Amazon India had to remove many of its products from the market and list them as “currently unavailable” because the new regulations prohibit e-retailers from selling products of companies in which they own shares.

The two companies have lost a combined $50 billion in market capitalization.

Amazon lost over $45 billion in market capitalization on the Nasdaq, while Walmart lost over $5 billion on the NYSE.

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