New Delhi: At a time when Amazon’s Global CEO Jeff Bezos is on a visit to India, Union Commerce Minister Piyush Goyal on Thursday said the company is 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.
Goyal said e-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make a back-door entry into the multi-brand retail segment.
India does not allow foreign investment beyond 49% in multi-brand retailing and is yet to approve any application of overseas retailers.
"They (Amazon) may have put in a billion dollars, but if they make a loss of a billion dollars every year, then jolly well will have to finance that billion dollar. So, it is not as if they are doing a favour to India when they invest a billion dollars," Goyal said at the Raisina Dialogue here.
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 previously announced.
Goyal wondered why an e-commerce market place model, where a firm provides an IT platform for buyers and sellers, incurred huge losses, adding it needs to be looked at.
"They are investing money over the last few years also in warehousing and certain other activities, which is welcome and good. But if they are bringing in money largely to finance losses and those losses in an e-commerce market place model," Goyal said.
He added that in a fair market place model in a turnover of $10 billion dollars, if a company is incurring a loss of a billion dollars, it "certainly raises questions where the loss came from".
Goyal asked how can a marketplace make such a big loss unless they are indulging in "predatory pricing or some unfair trade practices".
"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.
Goyal is unlikely to meet Bezos during his two-day visit to India. Amazon has come under investigations on multiple counts, including deep discounts and exclusive tie-up with preferred sellers, here.
The company had faced similar investigations in the European Union and the US.
In a major setback ahead of Bezos' India visit, fair market watchdog, the Competition Commission of India (CCI), on Monday ordered an inquiry into the operations of both Amazon and Flipkart on multiple counts, including deep discounts and exclusive tie-up with preferred sellers.
Finding merit in the allegations levelled by traders' body Delhi Vyapar Mahasangh, the commission asked its director general (DG) to complete the investigation in 60 days from the receipt of the order.
Meanwhile, traders across 300 cities of the country have planned to hold protests under the aegis of the Confederation of All India Traders (CAIT) during Bezos' visit.
The minister added that India allows foreign investments in e-commerce market place model and in this model buyers and sellers are free to trade, but the market place player cannot own the inventory, or they can not determine prices.
There are several established market rules for an e-commerce market place business in India and "I think as long as everybody follows these rules, we very much welcome e-commerce into India," he added.
Further, he said that India has strict rules for FDI in multi-brand retail trading and anybody 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 investigated.
"Whether they are doing that or not is a matter of the investigators to decide...whatever (would be their) findings, that should be respected by everybody," Goyal said.
Amazon.com Inc will invest USD 1 billion in digitising small- and medium-businesses in India and expects to export $10 billion worth of India-made goods by 2025, Bezos said on Wednesday.
Speaking at a company event in New Delhi, Bezos said he feels the 21st century is “going to be the Indian century.” He also confirmed the company will export $10 billion worth of Make in India goods by 2025.
Bezos was in India for a two-day event being organised by Amazon for small and medium businesses. The event kicked-off in Delhi where he met key leaders and policymakers, as well as Prime Minister Narendra Modi.
(With inputs from PTI)