Amazon's fresh $1B investment in India is not a big favor, says India trade minister

Manish Singh

India’s trade minister isn’t impressed with Amazon’s new $1 billion investment in the country.

A day after Amazon chief executive Jeff Bezos announced that his company is pumping in an additional $1 billion into its India operations, making the total local investment to date $6.5 billion, the nation’s trade minister Piyush Goyal said Amazon’s investment was not a big favor to the country.

"They may have put in a billion dollars, but then, if they make a loss of a billion dollars every year then they jolly well have to finance that billion dollars," Goyal said in a conference on Thursday organized by think tank Observer Research Foundation. "So it's not as if they are doing a great favor to India when they invest a billion dollars."

Amazon's marketplace arm alone reported a loss of about $800 million in the fiscal year ending March 2019, according to regulatory filings. "How can a marketplace make such a big loss, unless they are indulging in predatory pricing or some unfair trade practices? These are the real questions that need answers," Goyal said.

The remark from the Indian minister comes days after the nation's antitrust watchdog announced a probe into Amazon India and Walmart-owned Flipkart's alleged predatory practices.

Bezos, who is in India this week, has sought to meet with India’s Prime Minister Narendra Modi, but his request has yet to be approved, a person familiar with the matter told TechCrunch.

Goyal reiterated that foreign e-commerce players would have to abide by the local law if they want to continue to operate in the nation. He said the watchdog’s allegations were “an area of concern for every Indian.”

"We allowed every entity to come to India in a marketplace model. A marketplace model is an agnostic model where buyers and sellers are free to trade. If they establish an agreement, then the transaction is between the buyer and seller. The marketplace cannot own the inventory, cannot have control over the inventory, cannot determine prices, and cannot have an algorithm that influences how products from different sellers are listed on the platform," he added.

"We have several rules for marketplaces in India. As long as one follows them, they are free to operate in India," he said. Some of the allegations that are being investigated in India surround the alleged violation of these very aforementioned guidelines.

Goyal's comments may further escalate the tension between Amazon and the Indian government. Last year, U.S. senators criticized New Delhi after it restricted foreign companies from selling inventory from their own subsidiaries. The move forced Amazon and Flipkart to abruptly pull hundreds of thousands of goods from their marketplaces.

On Wednesday, dozens of merchants protested against Amazon India and Flipkart and asked the government to intervene. Bezos said earlier this week that Amazon's fresh $1 billion would help millions of small merchants come online for the first time.

Bezos, who has not addressed Mr. Goyal's comment or the protests, appeared at an event with Bollywood celebrities on Thursday in Mumbai, where he announced that the company was doubling down on its investment in Prime Video streaming service in the country. He did not disclose any figures.