This Article is From Jan 17, 2020

"Amazon Has To Cover Losses": Piyush Goyal On Jeff Bezos's Announcement

Amazon CEO Jeff Bezos had announced Wednesday that the company plans to invest $1 billion to help digitize small and medium businesses in India.

'Amazon Has To Cover Losses': Piyush Goyal On Jeff Bezos's Announcement

Piyush Goyal said it's not as if they are doing a great favor when they invest a billion dollars.

The Government has scoffed at Amazon.com Inc. founder Jeff Bezos' offer to invest $1 billion in the country, firing the latest salvo at an e-commerce giant that's been accused of predatory business practices.

Union Minister for Commerce and Railways Piyush Goyal delivered a stinging rebuke two days after Mr Bezos arrived in New Delhi and touted his efforts to help digitize small and medium enterprises. The investment would bring Amazon's bet on the Indian market to about $6.5 billion. Mr Goyal told a gathering of foreign ministers from around the world he welcomed an investigation into the company's alleged "predatory pricing and unfair trade practices."

"They may have put in a billion dollars," Mr Goyal said at the Raisina Dialogue in New Delhi on Thursday. "But then if they make a loss of a billion dollars every year, then they jolly well have to finance that billion dollars. So it's not as if they are doing a great favor to India when they invest a billion dollars."

Mr Bezos has attracted significant opposition during a tour of India intended to underscore its importance as a growth driver for Amazon. The country's antitrust regulator initiated a formal investigation hours before his arrival, and retailers affiliated with the Confederation of All India Traders organized sit-ins and public rallies in multiple cities to protest Amazon's traditional cut-price approach and exclusive-selling practices.

Outside the venue of Amazon India's annual event for small retailers Wednesday, demonstrators held banners proclaiming "Amazon, go back!" and with Mr Bezos' face crossed-out. The CEO has sought a meeting with Prime Minister Narendra Modi but that hasn't come through.

Mr Bezos went on to Mumbai where he visited a neighborhood store. It's these small stores that are up in arms against the retail behemoth. The chief executive then rubbed shoulders with Bollywood personalities. Amazon is plowing money into creating Bollywood-dominated content for its Prime Video streaming service to lure movie-mad Indians.

Increasing Hostility

Mr Goyal's comments were also an indication that Modi's government is trying to safeguard the interests of smaller traders, the traditional voter base of his Bharatiya Janata Party, as elections approach in Delhi.

Soon after Mr Goyal spoke, the chief of his party's foreign cell, Vijay Chauthaiwale, tweeted barely-veiled criticism of the Washington Post, which is owned by Mr Bezos. The U.S. newspaper has been criticized by the BJP and its allies for its coverage of the Modi government's increasingly right-wing policies.

The flare-up suggests India is turning increasingly hostile to the monopolistic practices of foreign e-commerce players that dominate the burgeoning market. Responding to widespread complaints, India restricted foreign direct investment inmulti-brand retail and this has forced Amazon and Walmart Inc.'s Flipkart, the two biggest e-commerce players in India, to overhaul business models to comply with new rules introduced in December 2018.

In 2016, New Delhi had said foreign-owned e-commerce platforms could operate as marketplaces -- facilitating transactions between sellers and consumers -- but not sell directly. Flipkart and Amazon had established wholesale networks to reach their customers. But the more recent regulations target this workaround, banning foreign e-commerce sites from selling goods from companies in which they own a stake or have commercial arrangements with.

Yet resentment toward Amazon and Walmart lingers. On Thursday, Mr Goyal also questioned why an e-commerce marketplace should make losses.

"Anybody who tries to use the e-commerce marketplace model to get into themulti-brand retail space surreptitiously will have to be questioned, will have to be investigated," Mr Goyal said.

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