Amazon should understand Indian dilemma better

Amazon.com Inc Founder and Chief Executive Officer Jeff Bezos said on January 15 that his company would invest an additional $1 billion (about Rs 7,000 crore) to help bring small businesses online in India, and also committed to using the retail giant's "size, scope and scale" to export $10 billion of 'made-in-India' goods by 2025.

Bezos' India visit — for the maiden edition of his firm's micro, small and medium enterprises (MSME)-focused event, Amazon Sambhav — comes at a time when the Competition Commission of India (CCI) is probing his company, as well as Walmart-owned Flipkart, on complaints of deep discounting practices and tie-ups with preferred sellers.

As many as 3,000 small and medium businesses (SMBs), startups, and technology solution companies thronged the venue in Delhi from across the country to attend the two-day event, cheering Bezos as he spelt out his vision for India. Bezos sought to reach out to Indians by donning traditional Indian attire.

Bezos didn't mention that some of that energy was being directed against him. As he spoke at Jawaharlal Nehru Stadium, the venue of the summit, in another part of the city, a group of traders protested Amazon's policy of offering deep discounts on products, a strategy the traders claim is aimed at bankrupting them and cornering market share.

They held up posters that read "Amazon Go Back". As part of its investments, Amazon will expand the reach of its existing Digital Haats in 100 cities, villages and communities that will help provide services such as e-commerce on-boarding, cataloguing and warehouse space for small businesses.

Amazon will also expand its Amazon Easy programme, which helps kirana shops set up kiosks to provide assistance to their customers in choosing the right product, place an order on Amazon and earn a commission in the process. Despite a surge in revenue and growth, Amazon India's wholesale and marketplace entities posted a loss of around Rs 5,800 crore ($820 million) in FY19.

The protests by local traders against Amazon and Flipkart's practices are getting louder by the day. Neither manufacturers nor traders here are getting any benefit from the business models of Amazon and Flipkart because they largely import their products from China and Korea (up to 80 per cent of their products) and sell here.

In response, Union Commerce Minister Piyush Goyal on Thursday said the company was not doing India a favour by investing a billion dollars and questioned how the online retailing major could incur such "big" losses if not for its predatory pricing.

The reason for the snub is not far to seek. As long as Washington Post, owned by Bezos continues to be critical of the Modi government, it cannot expect any softening of the stand. The Centre minds its business too. Foreign investors should understand the Indian dilemma better.

India sure wants to open up to the world, but there are problems with this internally with the strong trade unionism opposed to it. Moreover, if one uses a part of his business to blackmail the government, then one cannot expect a reward for the same. Certainly not when Delhi elections are around the corner. After all the trading community is quite large here.