Amazon AMZN.O hasn't done India any big favours by announcing a new $1 billion investment, its trade minister said on Thursday, laying bare tensions with the USA online retail giant during a visit to the country by its CEO Jeff Bezos. "Amazon is not doing a favour to India by investing a billion dollars", Goyal said on Thursday, as cited by media.
Retail giants such as Amazon and Flipkart have been accused by small and medium businesses of unfair trade practices, including use of deep discounts, exclusive launch of mobile phones, and giving preference to select sellers to capture market share.
Amazon's Dollars 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.
"He added that a probe into Amazon's activities has already been initiated and the company is not doing India any favours by investing $1 billion in the country".
India's Minister of Commerce and Industry Piyush Goyal has warned United States e-commerce giant Amazon not to exploit any loopholes in the law as the company plans to expand in the country.
Goyal, who has not yet given Bezos an audience, said e-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make a back-door entry into multi-brand retail segment.
During a three-day visit to India, where Amazon has its sights set on dominating the burgeoning e-commerce market, Bezos laid out his ambitious plans for Amazon's investment in India over the next five years, including helping to digitise millions of small businesses.
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.
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.
He went on to question how the online retailing company was able to incur "such big losses" if not by indulging in predatory pricing.
Commerce Minister Piyush Goyal said that New Delhi was in advanced stages to resolve some of the ongoing trade issues with Washington and was keen to further expand ties, including a free trade pact.
"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.
He added that the government has permitted e-commerce entities to enter the country under the marketplace model, and as long as everyone follows the rules, they are welcome to conduct their business here.
The minister added that India allows foreign investments in e-commerce marketplace model and in this model buyers and sellers are free to trade, but the marketplace player can not own the inventory, or they can not determine prices.