Piyush Goyal: Amazon investing to cover losses, not doing India a favour

NEW DELHI: Commerce and industry minister Piyush Goyal on Thursday played down the $1 billion investment promised by Amazon boss Jeff Bezos, saying the money was meant to cover the losses that the e-commerce player had notched up in the country and it was not “doing a favour”.
The minister’s statement at the Raisina Dialogue came a day after the Amazon CEO announced a fresh $1 billion investment in India to digitise small businesses in the country as part of an initiative to get them to sell on the marketplace.
“I have on more than one occasion said this to the people of India that please follow the letter of the law and the spirit of the law. Don’t try to find loopholes. They may have put in $1 billion, but if they make a loss of $1 billion every year then they jolly well have to finance that $1 billion. It is not as if they are not doing a great favour to India when they invest $ 1 billion,” the minister said at the event.
He then went on to reiterate that e-commerce companies that were allowed to operate through the marketplace model, and barred from multi-brand retail, needed to adhere to the rules “in letter and spirit”.
Just last week, Competition Commission of India, the country’s fairplay watchdog, ordered a probe to see if the two big e-tailers, Amazon and rival Flipkart, were operating in line with Indian competition rules. The probe came days before Bezos landed in India. Government officials, including Goyal, cold-shouldered overtures from Amazon to meet Bezos during his visit to the country.
Small traders are up in arms against global retail giants, saying they are under-cutting their businesses leading to job losses and have demanded a level-playing field.
“They are investing money over the last few years in warehousing and certain other activities, which is welcome and very good... in a fair marketplace model if on a turnover of $10 billion you are going to have a loss of $1 billion, it certainly raises questions over 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?” Goyal said, adding that the authorities probing allegations of wrong-doing by companies such as Amazon and Flipkart will look into it.
Although the minister was attacked on social media for the statement, Confederation of All India Traders, which has been behind protests against Amazon and Flipkart by local traders, lauded the “bold and pragmatic” statement. “With this stand the minister has once again reiterated that the government is sensitive to the interests of seven crore traders of India who are severely affected by the malpractices of e-commerce giants,” CAIT president Praveen Khandelwal said in a statement.
“We have very strict rules about FDI in multi-brand retail, where only 49% (FDI) is allowed and anybody who tries to use the marketplace model to get into the multi-brand retail space surreptitiously, will have to be questioned and will have to be investigated. Whether they are doing that or not is a matter for the investigators to decide,” Goyal said.
He also said India and the US are in an “advanced stage” of dialogue to resolve some of the pressing trade issues. He said that both the countries can expand their trade relations which in future may result in a preferential or a free trade agreement.