Amazon may discontinue operations in India

Global e-commerce company Amazon has said it sees “substantial uncertainties” in interpretation of Indian laws, which could impact its business in one of the world’s fastest-growing multi-billion dollar online shopping market. The US-based firm expressed similar views on rules in China. “There are substantial uncertainties on the interpretation of China and India’s laws, and is possible the government will take a view contrary to ours,” Amazon said in a regulatory filing to the US Securities and Exchange Commission (SEC). The firm said: “Our Chinese and Indian businesses and operations may be unable to continue to operate if we or our affiliates are unable to access sufficient funding or if China enforces contractual relationships with respect to the management and control of such businesses.” Amazon added if its international activities were found in violation of any existing or future China or India’s laws or regulations, its businesses in those countries could be subject to fines and other financial penalties, have licences revoked, or be forced to shut. It said in India the government restricted ownership or control of Indian companies by foreign entities involved in online multi-brand retail trading activities. Amazon, like its domestic rivals Flipkart and Snapdeal, operates under a marketplace model, where it offers its platform to sellers across the country. “For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers. Though we believe these structures and activities comply with existing laws, they involve unique risks,” Amazon added. The disclosure comes amid reports of Amazon facing tax issues with local authorities in Karnataka. In July, Amazon had said it will invest $2 billion (Rs 12,000 crore) in India to expand business, after its largest Indian rival Flipkart announced $1 billion in funding. Amazon, which launched its marketplace in India last year, said the country is one of its fastest-growing markets and on track to touch $1 billion in gross sales. However, according to media reports, the company is logging losses in India. A report in The Economic Times, citing the filing of Amazon Seller Services with the Registrar of Companies, said the company’s losses in the year ended 31 March mounted to Rs 321 crore. A report in the Mint says the figure was just Rs 24.6 crore in the previous year. The Mint report notes that the company’s capital investment in India also witnessed a significant rise during the period – from Rs 200 crore to Rs 1500 crore. The company is running a marketplace in India where sellers give commission to the company. Apart from this, advertisements are another revenue stream for the company in India. However, Amazon is not the only retailer company making losses in India. The ET report says the combined losses of Snapdeal, Amazon and Flipkart for the last financial year stood at Rs 985 crore. With inputs from PTI