Goyal questioned how can a marketplace make such a huge loss unless they are indulging in “predatory pricing or some unfair trade practices”
New Delhi: As Amazon’s Global CEO Jeff Bezos is on a three-day visit to India, Commerce Minister Piyush Goyal on Thursday said the company is not doing any favor to India by investing a billion dollars and questioned how the online retailing major could incur such “big” losses if not for its predatory pricing.
Piyush Goyal said e-commerce companies have to follow Indian rules in letter and spirit and not find fault lines to make a back-door entry into the several-brand retail segment.
Our country does not allow foreign investment beyond 49% in multi-brand retailing and is yet to approve any application of overseas retailers.
“Amazon may have put in a billion dollars, but if the company makes a loss of a billion dollars every year, then jolly well will have to finance that billion-dollar. So, it is not like the company is doing a favor to our country when they invest a billion dollars,” Goyal said.
The $1 billion investment by Amazon.com to help bring small and medium businesses online is on top of the $5.5 billion funding it had announced in past.
Piyush Goyal thinks why an e-commerce market place model, where a firm provides an IT platform for buyers and sellers, incurred big losses, adding it needs to be observed.
“Companies are investing money over the past few years also in warehousing and certain other activities, which is a welcome move. But if they are bringing in money mostly to finance losses and those losses in an e-commerce market place model,” Goyal said.
Goyal added that in a fair market place model in a turnover of $10 billion dollars if a company is suffering a loss of a billion dollars, it “certainly raises questions where the loss came from”.
Goyal questioned how can a marketplace make such a huge loss unless they are indulging in “predatory pricing or some unfair trade practices”.
He said, “These are all 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,”.
Goyal is unlikely to meet Bezos during his three-day visit to India. Amazon has come under probe on multiple counts, including more discounts and exclusive tie-up with preferred sellers.
The company had faced similar inquiries in the European Union and the US.
In a major setback ahead of Bezos’ visit to India, fair market watchdog, the Competition Commission of India (CCI), on Monday ordered an investigation into the operations of both Amazon and Flipkart on several counts, including more discounts and exclusive tie-up with preferred sellers.
In the allegations leveled by traders’ body Delhi Vyapar Mahasangh, the Competition Commission of India asked its director general (DG) to complete the investigation in 60 days from the receipt of the order.
Meanwhile, traders across 300 cities of India have planned to hold agitation under the aegis of the Confederation of All India Traders (CAIT) during Bezos’ visit.
Goyal added that our country allows foreign investments in the e-commerce market place model and in this model buyers and sellers are free to trade. But when the market place player cannot own the inventory, or they can not decide on prices. There are many established market rules for an e-commerce market place business in India and “I think as long each follows these rules, we welcome e-commerce into India,”.
He said our country has strict rules for FDI in multi-brand retail trading and anyone who tries to use the e-commerce market place model to get into the multi-brand retail space surreptitiously will have to be questioned and inquiry.
“Whether companies are doing that or not is a matter of the probers to decide…whatever their findings, that should be respected by everybody,” Goyal said.