The Indian Premier League 2020

Business Companies 16 Jan 2020 Amazon not doing fav ...

Amazon not doing favour to India by investing a billion dollars: Piyush Goyal

PTI
Published Jan 16, 2020, 9:00 pm IST
Updated Jan 17, 2020, 11:49 am IST
In a sharp takedown of Jeff Bezos’ company, commerce minister questions predatory pricing by online shopping companies
Union commerce minister Piyush Goyal is not impressed by the big investment plans announced by Amazon in India. (PTI Photo)
 Union commerce minister Piyush Goyal is not impressed by the big investment plans announced by Amazon in India. (PTI Photo)

New Delhi: A day after Jeff Bezos announced plans to invest USD 1 billion more in India, Union commerce minister Piyush Goyal said Amazon was not doing a favour to India by investing in the country.

He went on to question how the online retailing company was able to incur “such big losses” if not by indulging in predatory pricing.

 

Goyal, who has not yet given Bezos an appointment, said e-commerce companies must follow Indian rules in letter and spirit and not look for loopholes through which make a back-door entry into the multi-brand retail segment.

India does not allow foreign investment beyond 49 per cent in multi-brand retailing and has not yet approved any application by overseas retailers.

“They (Amazon) may have (decied to invest) a billion dollars, but if they make a loss of a billion dollars every year, then jolly well they 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 here.

 

Amazon’s USD 1 billion investment to bring small and medium businesses online is a top-up of the USD 5.5 billion funding it had previously announced.

The minister wondered why an e-commerce market-place model, in which a firm provides an IT platform for buyers and sellers, would knowingly incur huge losses.

“They (have been) investing money over the last few years in warehousing and certain other activities, which is welcome and good. But they are bringing in money largely to finance losses, and those losses in an e-commerce market-place model (indicate predatory pricing)," Goyal said.

 

He added that in a fair market-place model with a turnover of USD 10 billion dollars, if a company is incurring a loss of a billion dollars, it "certainly raises questions where the loss came from".

Goyal said 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,” he said.

Fair trade regulator Competition Commission of India (CCI) recently ordered a probe into Flipkart and Amazon for alleged malpractices, including deep discounting and tie-ups with preferred sellers on their platforms.

 

“CCI has already initiated an enquiry into the… practices of Amazon and Flipkart. And that is certainly an area of concern for every Indian," the minister said.

Goyal’s remarks against Amazon assume significance as the domestic trade body CAIT has time and again alleged that e-commerce players including Amazon were following predatory pricing in India.

The Confederation of All India Traders (BJP) hailed the "bold and pragmatic statement" made by the commerce minister.

“With this stand, the minister has once again reiterated that the government is sensitive to the interests of seven crore traders who are severely affected by the malpractices of e-commerce giants,” it said in a statement.

 

...




ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT