A day after Amazon founder and CEO Jeff Bezos announced that his company would be investing $1 billion in digitising medium and small businesses in India, the country’s commerce minister Piyush Goyal has said that the company is not doing India a great favour by investing.
Speaking at the Raisina Summit in New Delhi, Goyal said that while Amazon was investing the money in India, they would still have to finance the amount in the event that they incurred losses.
“They may have put in a billion dollars but then if they make a loss of a billion dollars every year then they jolly well have to finance that billion dollars,” he said.
“So it’s not as if they are doing a great favour to India when they invest a billion dollars,” Goyal added.
“They are investing money over the last few years also in warehousing and certain other activities, which is welcome and good. But if they are bringing in money largely to finance losses and those losses in an e-commerce market place model," Goyal said.
He added that in a fair market place model in a turnover of $10 billion dollars, if a company is incurring loss of billion dollars, it "certainly raises questions, where the loss came from".
Goyal said that how can a marketplace make such a big loss unless they are indulging in "predatory pricing or some unfair trade practices".
"These are real questions which need answers and I am sure the authorities who are looking at it seek those answers and I am sure the e-commerce companies will have their say on that," he said.
In 2018-19, Amazon declared cumulative losses of over Rs 7,000 crore in India.
Goyal later tweeted a warning for e-commerce companies to follow the rules when they invest in India.
“Our Govt. has allowed e-commerce entities to come to India under the marketplace model. As long as everyone follows the rules, we welcome e-commerce in India and they are happy to trade and serve the people of India.”
“I have on more than one occasion, said this to the people of India and to all investors, that to please follow the letter of the law and the spirit of the law. Don't try to find loopholes when clearly we have articulated what the e-commerce model is.”
Just a day before Bezos’ visit, Amazon was slapped with a probe by India’s antitrust regulator, the Competition Commission of India (CCI), which was investigating a complaint filed by the Delhi Vyapar Mahasangh, who allege the e-commerce firm of anti-competitive practices like preferential listing, exclusive tie-ups nad private labels.
Flipkart was also placed under investigation.
In its order, the Competition Commission of India (CCI) said it needs to be investigated whether the alleged exclusive arrangements, deep discounting and preferential listing by online marketplace platforms are being used as an "exclusionary tactic to foreclose competition" and are resulting in an appreciable adverse effect on competition.
Commenting on the order, an Amazon India spokesperson said,"We welcome the opportunity to address allegations made about Amazon. We are confident in our compliance, and will cooperate fully with CCI."
Jeff Bezos’ trip to India was met with several protests, as traders across the country held protests across 300 cities against Amazon’s trade practices, which they say hurt their businesses.
Amazon launched its India operators in June 2013. By 2018, they had become the largest e-commerce company in the country by gross sales.
On January 5, Amazon announced a tie-up with India’s second-largest retail chain, Future Retail, to grow its online grocery presence, Future Retail owns brands such as Big Bazaar and Foodhall.
Flipkart, Amazon’s main rival in India, was in 2018 acquired by the world’s largest retailer, Walmart, to tackle the growing e-grocery segment in India.
The market has grown increasingly competitive, with India’s largest company, Reliance Industries, set to enter the field with JioMart, and through a pan to tap small ‘kirana’ retailers that dot the country.
With inputs from PTI
