Amazon is not doing India “a great favour” by investing $1 billion in the country, and that the financial losses reported by the e-commerce company raise questions about its business practices here, Minister of Commerce and Industry Piyush Goyal said Thursday.
The statement, in response to a query about opposition by an association of small Indian traders to Amazon’s domestic operations, comes while the US retail giant’s chief is currently visiting the country.
“…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. So, it’s not as if they are doing a great favour to India when they invest a billion dollars,” said Goyal during a panel discussion at the Raisina Dialogue held here.
Amazon CEO Jeff Bezos had said Wednesday that the firm would invest $1 billion into India to “digitise” micro, small and medium enterprises.
Subsequent to Goyal’s statement, Vijay Chauthaiwale, In-Charge, Foreign Affairs Department, BJP, in a tweet said: “Mr @JeffBezos, please tell this to your employees in Washington DC. Otherwise your charm offensive is likely to be waste of time and money”.
When contacted by The Indian Express, Chauthaiwale said: “While Mr Bezos is so positive about India and its democracy, I want to say that he should give the same message to his people at Washington Post. I think Washington Post is one-sided and biased against Modiji. I would, however, like to say that I am not against Amazon and I am a happy customer of Amazon.”
Amazon and Flipkart have been under fire from the Confederation of All India Traders (CAIT), which represents 70 million brick-and-mortar retailers in the country. The association has alleged that the e-commerce firms have been bringing in Foreign Direct Investment (FDI) into India only to fund losses arising out of deep discounting and predatory pricing practices. The companies have denied these allegations.
Goyal, in his response during the discussion on Thursday, said that Amazon’s investment in warehousing and “certain other activities” was “welcome”. However, if the company was bringing in money “largely to finance losses” in a fair marketplace model, it was questionable, according to the minister.
“In a turnover of $10 billion, if you’re going to have a loss of $1 billion-$1.5 billion, it certainly raises questions where the loss came from. 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 will need answers…,” remarked Goyal, adding that the concerned authorities would be looking into this issue and that the e-commerce companies in question would have their say as well.
The minister also mentioned the Competition Commission of India’s (CCI) decision to probe allegations of deep discounting and potential discriminatory practices by Amazon and Flipkart, adding that this was “certainly an area of concern for every Indian”.
“We did allow e-commerce entities to come into India in the marketplace model,” said Goyal, adding that the marketplace cannot own or control inventory, determine prices or have algorithms to determine which product will be given a market preference.
“There are several established rules of a marketplace. I think as long as everybody follows those rules, we very much welcome e-commerce into India and they are happy to come and trade and serve the people of India,” he said. Anybody who tries to use the e-commerce model to get into the multi-brand retail space “surreptitiously” will have to be questioned and will have to be investigated, he added.
“The honourable minister’s statement shows that the government is serious about anti-competitive allegations against Amazon and keenly watching over the investigations ordered by Competition Commission of India against Amazon and Flipkart,” said CAIT in a statement following Goyal’s remarks.
“We are extremely satisfied to see that the Commerce Minister is so well versed with the problems faced by the citizens and is committed to resolve the crisis faced by 7 crore traders due to malpractices of Amazon and Flipkart,” it said.