New Delhi, Aug 21 – Commerce and Industry Minister Piyush Goyal has raised concerns about Amazon’s recent announcement to invest USD 1 billion in India, suggesting that the move is more about offsetting the company’s losses rather than contributing positively to the Indian economy.
Speaking at the launch of a report titled Net Impact of E-commerce on Employment and Consumer Welfare in India, Goyal criticized Amazon for what he described as “predatory pricing,” which he believes negatively affects small retailers in the country. He argued that the significant losses Amazon has reported in India are a result of aggressive pricing strategies that harm local businesses.
“When Amazon announces a billion-dollar investment, it’s celebrated, but this money is not necessarily for supporting the Indian economy,” Goyal said. “They had a billion-dollar loss, and this investment seems more like an attempt to recover that loss.”
Goyal questioned the legitimacy of the expenses incurred by Amazon, particularly a Rs 1,000 crore payment to professionals, suggesting that it could be a tactic to prevent legal challenges. He expressed skepticism about whether the reported Rs 6,000 crore annual loss indicates predatory pricing practices, which are prohibited under current e-commerce regulations.
The minister also took aim at the broader e-commerce sector, challenging its business model and its impact on small retailers. He expressed concern that e-commerce companies might be circumventing regulations by routing business through intermediaries to appear as B2B rather than B2C operations.
Goyal warned about potential social disruptions caused by the rapid growth of e-commerce, drawing parallels to the experiences of Western countries where traditional retail has been significantly impacted. He also expressed worries about the rise of online pharmacies and their effect on the country’s existing pharmacy sector.
While acknowledging the role of technology, Goyal emphasized the need for it to be implemented in an orderly manner that considers the welfare of small retailers. He urged that technology should be used to empower and innovate without causing undue disruption to existing businesses.
Goyal also criticized the report on e-commerce’s impact, disassociating himself from its findings and suggesting that it overlooked the negative effects on employment and local businesses.
Amazon India is currently facing increased competition from rivals like Flipkart, Meesho, and other delivery services such as Blinkit, Swiggy’s Instamart, and Zepto, which are aggressively expanding their market presence.
In a recent statement, Amazon CEO Andy Jassy mentioned plans to invest an additional USD 15 billion in India, bringing the company’s total investment in the country to USD 26 billion, signaling a strong commitment to its Indian operations despite the ongoing challenges.
