Commerce and Business Minister Piyush Goyal on Wednesday (August 21, 2024) questioned Amazon’s announcement of $1 billion funding in India, saying the U.S. retailer was not doing any nice service to the Indian economic system however filling up for the losses it had suffered within the nation.
He mentioned that their big losses in India “smells of predatory pricing“, which isn’t good for the nation because it impacts crores of small retailers.
Launching a report on ‘Web Affect of e-commerce on Employment and Client Welfare in India’, the Minister lambasted the e-commerce firms, questioning their enterprise mannequin that has been impacting small retailers within the nation.
“When Amazon says that we’re going to make investments a billion {dollars} within the nation, we have a good time, and we neglect that the billion {dollars} should not coming in for nice service or funding to assist the Indian economic system. They made a billion-dollar loss of their steadiness sheet that 12 months, they needed to fill in that loss,” he mentioned.
”And the way did that loss get precipitated, they paid ₹1,000 crores to professionals. I have no idea who these professionals are…I’d like to know, which chartered accountants, professionals, or attorneys get ₹1,000 crores until you might be paying all the highest attorneys to dam them in order that no person can battle a case in opposition to you,” the Minister mentioned.
He puzzled whether or not the ₹6,000 crore loss in a single 12 months doesn’t scent of predatory pricing, as they’re simply an e-commerce platform and people firms should not allowed to do B2C (enterprise to shopper) enterprise.
As per the coverage, the e-commerce platform legally can’t do B2C within the nation.
The Minister alleged that these firms solely re-route all the companies by an entity to indicate that it’s B2B.
“How are they doing it? Ought to this not be a matter of concern for us,” he mentioned.
He added that the e-commerce sector has a task, however one has to assume “very” fastidiously and cautiously about what that position is.
“How that position will be in an organised trend. Is predatory pricing insurance policies good for the nation?” Mr. Goyal requested.
He additionally mentioned that e-commerce firms are consuming into the small retailer’s high-value, high-margin merchandise which can be the one gadgets by which the mom-and-pop shops survive.
The Minister additionally mentioned that with the fast-growing online retailing within the nation, “Are we going to trigger big social disruption with this huge development of e-commerce”.
Citing examples of Western international locations, Mr. Goyal mentioned Europe and America have seen the results of this.
“What has occurred to the mom-and-pop shops there? What number of do you see surviving, why did Switzerland enable e-commerce till lately (so late),” he mentioned, including “…I’m not wishing away e-commerce, it’s there to remain”.
Additional, he mentioned one has to see the affect of cloud kitchens on eating places and other people shopping for meals gadgets on-line.
“We are going to wind up turning into a rustic of sofa potatoes, watching OTT and having meals at dwelling day by day,” he mentioned.
Commenting on on-line pharmacies, the Minister mentioned, “Now we have to evaluate what is going on to five lakh pharmacies of the nation”.
He expressed concern over these corporations promoting medicines on-line.
“On-line, you possibly can order no matter you need…it’s a matter of concern,” Mr. Goyal mentioned, including “What number of cell shops do you see within the nook, and what number of had been there 10 years in the past”.
He identified that India just isn’t a developed nation just like the U.S. and Switzerland with excessive per capita revenue, and a big part of individuals want affirmative motion and assist right here.
“In fact, I don’t deny that expertise will play its half, expertise is a way to empower, to innovate, to fulfill shopper necessities, most likely generally extra effectively, however we must see that it grows in an orderly trend,” he mentioned.
Individuals need to see that this connectivity and comfort is citizen-centric, he mentioned, including that within the race for market share of on-line retailers at 27% a 12 months, “we don’t wind up inflicting big disruption for the 100 million small retailers throughout the nation”.
Amazon India is dealing with rising aggressive depth in India from gamers like Flipkart and SoftBank-backed Meesho, in addition to the onslaught of corporations like Blinkit, Swiggy’s Instamart and Zepto which can be making aggressive inroads into the market as busy shoppers go for the comfort of on the spot supply of grocery and plenty of different home items.
Final 12 months, Amazon had talked of plans to take a position $5 billion extra in India, taking its complete funding within the nation to $26 billion.
After assembly with Prime Minister Narendra Modi throughout his go to to the U.S. in 2023, Amazon CEO Andy Jassy mentioned: “I had an excellent and productive dialog with Prime Minister Modi. I believe we share various targets. Amazon is without doubt one of the largest traders in India. Now we have invested $11 billion so far and intend to take a position one other $15 billion, which can carry the full to $26 billion. So, we’re very a lot trying ahead to the way forward for partnering”.
Mr. Goyal additionally criticised the report, saying he doesn’t agree with the findings of the examine ‘Web Affect of e-commerce on employment and shopper welfare in India’.
“I wish to fully disassociate myself from this report…I don’t agree with any of those findings….I believe, within the urge to indicate that this has not had an affect on employment in India, the researchers have overpassed even the statistics, which EY has put out,” the Minister mentioned.
