New Delhi: Union commerce minister Piyush Goyal on Thursday said that companies like Amazon were doing no big favour to India by their investments and questioned how the online retail giant could incur huge losses without having engaged in some form of predatory pricing.
The senior BJP leader’s comments come just a day after Amazon CEO Jeff Bezos arrived in India and announced that the company would invest $1 billion in helping India’s small businesses move onto a path of digital transformation.
Bezos, who attended Amazon’s mega trade event for small businesses on Wednesday, is yet to meet either Goyal or Prime Minister Narendra Modi. Sources say it is unlikely that such a meeting will happen.
The billionaire’s visit to India has been marked by a frosty reception including country-wide protests by small retailer associations and an anti-trust investigation launched by the Competition Commission of India.
At the Raisina Dialogue event in New Delhi, Goyal remarked that e-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make back-door entries into multi-brand retail segment.
“They [referring to a question asked about Amazon’s $1 billion investment] 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 dollar. So, it is not as if they are doing a favour to India when they invest a billion dollars,” he said in response to a question raised by The Wire’s Mitali Mukherjee.
The $1 billion investment by Amazon to help bring small and medium businesses online is on the top of US $5.5 billion funding it had previously announced.
The minister wondered why an e-commerce market place model, where a firm provides an IT platform for buyers and sellers, incurring 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 market place 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 said that 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 and I am sure the e-commerce companies will have their say on that,” he said.
Washington Post grievances?
While this isn’t the first time that Goyal has raised his concerns over predatory pricing – the last time he did was in an unusual public exchange he had with US commerce secretary Wilbur Ross – what has added a new wrinkle to this debate is Bezos’ ownership of The Washington Post.
The Bharatiya Janata Party’s IT cell, which has a significant presence on Twitter and Facebook, has made no bones of the fact that it dislikes how the American newspapers cover India and the Narendra Modi government.
This dislike was obliquely referenced by the BJP’s Vijay Chauthaiwale, who heads the party’s foreign affairs department, in a tweet put out on Thursday evening.
Quoting a tweet by Bezos, in which the Amazon CEO praises India and declares that the 21st century is one where New Delhi will dominate, Chauthaiwale said that billionaire’s “charm offensive” is unlikely to yield any results unless this message is passed onto his “employees in Washington DC”.
Mr @JeffBezos , please tell this to your employees in Washington DC. Otherwise your charm offensive is likely to be waste of time and money . https://t.co/L06kI0AqLn
— Dr Vijay Chauthaiwale (@vijai63) January 16, 2020
Other news reports, particularly one put out by IANS, have alleged that the Washington Post’s coverage may be one of the reasons why Bezos is yet to meet Modi or Goyal. This, however, could not be independently confirmed by The Wire.
Bezos is also supposed to next visit Mumbai as part of an itinerary that will see the billionaire meeting Bollywood stakeholders for the company’s Amazon Prime Video business.
(With inputs from Reuters)