Jeff Bezos is in India and hardly anyone is pleased. A traders' body. claiming to represent millions of brick-and-mortar store owners, has hit the streets against the 'predatory' policies of the e-commerce giant Amazon; Bezos has reportedly sought to meet the prime minister and key government officials but was denied an appointment; and India's antitrust regulators have opened an investigation into Amazon.
Merely five years ago, and under the same political dispensation, this was not the case. Dressed in a Indianised version of a suit, with a scarf, Bezos handed over a giant $2 billion check as investment to Amazon India atop a brightly coloured truck. Bezos was also granted an audience with Prime Minister Narendra Modi.
But those were heady days for Indian economy, with a newly-elected government promised ease of doing business and as robust ecosystem to support trade. The world's richest man meeting the prime minister was an event that was celebrated by the media. Amazon, then barely a little more than an year old in India, was already plugging in $2 billion as investment, while promising to help boost Modi's dream of a digital India.
The next chapter in Bezos' India story was also encouraging. In 2016, while the Amazon investment in India climbed to $5 billion, Modi presented Bezos with US-India Business Council (USIBC) Global Leadership Award.
Bezos met Modi again in 2017 when the prime minister was on a three-day tour to the US and held a roundtable with top US CEOs. Bezos was among the star attendees at the event as Indian media reports ensured he made the headline in coverage of Modi's said visit.
India was an emerging economy, vying for trade and investment from the big four tech companies.
For Bezos, India was the dream playground: the world's only billion-strong population accessible to Western companies.
But things started to change for Bezos in Modi's second term, even as Amazon remains number two in the Indian market, even if behind by a razor thin margin — the company had 31.9 percent of India's market share, versus Amazon's with 31.2 percent, according to data cited by S&P Global Market Intelligence.
Days ahead of Bezos' scheduled visit, news of India's antitrust body ordering an investigation into alleged violations by Amazon and Walmart's Flipkart hit the headlines.
The Competition Commission of India (CCI) said that exclusive arrangements between mobile phone brands and e-commerce platforms, as well as allegations of e-commerce companies giving preferential treatment to certain sellers "merits an investigation."
The commerce ministry asked Amazon and Flipkart to furnish details including their shareholding, subsidiaries, business structure and information on their top sellers and their tax details, The Economic Times reported. Opponents of foreign based e-commerce giants say they are swallowing Indian market and finishing small traders by violating anti-hoarding rules and exploiting loopholes in FDI laws.
The new amended e-marketplace laws restrict bulk purchases by any vendor from any entity to 25 percent and bans the marketplace owner from selling products made or marketed by their own companies.
But apart from these policy and technical challenges surrounding Amazon, Bezos was greeted with a rather public snub by the Union Minister of Commerce Piyush Goyal, upon his offer to invest additional $1 billion to help small traders transition onto the online marketspace.
Goyal, who has not yet given Bezos an audience, said e-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make a back-door entry into multi-brand retail segment.
"They (Amazon) may have put in a billion dollars but if they make a loss of a billion dollars every year, then jolly well will have to finance that billion dollars. So, it is not as if they are doing a favour to India when they invest a billion dollars," he said at the Raisina Dialogue in New Delhi.
The minister wondered why an e-commerce marketplace model, where a firm provides an IT platform for buyers and sellers, incurred huge losses, adding that it needs to be looked upon.
"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 marketplace 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 wondered how a marketplace can 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.
Amazon, which is locked in a bruising battle against Flipkart, had registered cumulative losses of over Rs 7,000 crore across various units in 2018-19. The continued flow of fresh investments, however, is indicative of Amazon's confidence in the Indian market. Politically, this change in the direction of winds can be attributed to two counts.
India is a budding economy with a lot of untapped potential with its young workforce and aspirational middle class, offering great opportunity to global giants suffering tedium in other more developed economies. But India is also the place where small traders have traditionally flourished and kept the wheels of the economy moving. It is these traders who feel threatened by the internet giant's presence, and they in turn are key voter base of the BJP.
With Bezos visiting days ahead of the Delhi elections, where traders are already miffed at political parties for failing to protect them from the Supreme Court-ordered sealing drive in 2016, BJP may have done some quick thinking. Add to this the protests by traders and shopkeepers, highlighting the issue of alleged unfair trade practices by the tech giant, and warming up to the Amazon CEO could have been political suicide.
Secondly, several reports have concluded that perhaps Bezos has managed to put off the ruling party because of the harsh coverage of issues such as Citizenship Amendment Act, National Register of Citizens and the Jamia students' movement by The Washington Post, which Bezos owns.
Although Bezos has not commented on the newspaper's coverage of India and the Modi government, but when US president Donald Trump accused him of influencing the Post's coverage, the paper categorically rejected suggestions that he has a hand in its decision-making.
Meanwhile, Goyal extended an olive branch by partially retracting his comments and stating that his statement was taken out of context. The minister has clarified that India welcomes all kinds of investments that follow the "letter and spirit" of the law. Goyal said that some people have misconstrued his remarks by suggesting that he had said something negative against Amazon. "I was only saying that investment should come as per the rules and regulation," Goyal said.
Meanwhile, Bezos too has successfully avoided confrontations and controversy. He did not react to Goyal's comments, and rather took the open letter route to defend his company against allegations of hawkish trade practices. In a letter addressed to "dear customers, sellers, and partners", he highlighted how his company was dedicated to giving back to the Indian community.
"Amazon is invested in sustainable growth and is the first company to sign the Climate Pledge — with a commitment to meet the Paris Accord ten years early. In India, we've announced that we will eliminate single-use plastic from our fulfillment network by June 2020, and we are adding 10,000 electric rickshaws to our delivery fleet. I fall more in love with India every time I return here. The boundless energy, innovation, and grit of the Indian people always inspire me. I'm excited to share that we will invest an incremental US$1 billion to digitize micro and small businesses in cities, towns, and villages across India, helping them reach more customers than ever before," Bezos wrote in a letter posted on Amazon India's home page.
With inputs from agencies
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Updated Date: Jan 18, 2020 00:11:36 IST