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As Amazon Hits India’s Job Market & Small Businesses, Need of the Hour is to Rein in the Corporate Giant

Representational photo.

Representational photo.

To circumvent Indian laws, different and transparently false subsidiary vendors are being created under various labels “choice, brand, basics, solimo etc” while the vendor is in fact just one – Amazon.

Never in India’s history have the micro and small sector been under such a sustained attack for so long.

The massive loss of jobs is truly mind boggling – 2.8 crore merchant establishments have shut down over just 1 year. Data suggests that of the 12.2 crore jobs lost last year, 75% or 9.1 crore, were small traders. What is amazing in all of this is, that not only is this the same segment of job creators who have been forced to pick up the highest tab in the governments demonetisation and GST implementation, but also the ones whose livelihood and interests have been trampled upon by large corporates like Amazon in absolute and flagrant violation of Indian law, with negligible regulatory or legal consequences.

Essentially they have had to pay the price for bureaucratic rapaciousness, while being denied the protections due to them by the complete and utter pusillanimity (or purchase?) of these same bureaucrats that the government relies on.

Let’s start with the blatant violations of Indian law that Amazon has been carrying out with absolute impunity, and seeming government collusion, given the lack of a regulatory crackdown. The basis for all these businesses in India is the Business to Business model, which is to say they connect businesses up with other businesses.

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As noted commentator Suhel Seth points out, this started in India some 20 years ago with Metro Cash and Carry, which was not meant to sell its products to individuals. However, Metro resorted to using the sales tax certificates of the businesses it was selling to, to start selling to individual customers who waltzed into its stores.

Amazon, however, advertised itself as a platform – essentially and online version of Khan Market – where anyone could come and set up shop. This gave the consumer the equivalent of a virtual stroll through Khan Market and picking up whatever they wanted. However, Amazon mutated this model, in complete violation of Indian law, to become both a market and a vendor.

Today, if you search for kitchen products, you get a brand called “SOLIMO” that pops up first in all searches that significantly undercuts most other mom-pop brands and independent vendor prices. In other product searches there is an “AMAZON CHOICE” label applied to certain products, including food, which yet again come up at the top of searches. Then you have an “AMAZON BRAND” ranging from underwear, to quilts, yet another “AMAZON BASICS” from fans to minor electronics.

In effect, what has happened here is that to circumvent Indian laws, different and transparently false subsidiary vendors are being created under various labels “choice, brand, basics, solimo etc” while the vendor is in fact just one – Amazon. The problem with this model is that it has the devastating impact of what is called the “Walmart effect” – that when a Walmart comes to town – the effect on local small businesses is no less than a nuclear strike, with absolute devastation and significant economic depression in that area.

Moreover, the very fact that Walmart used its position to force down supplier prices, meant that production left US shores mostly for China. In that sense, you could argue that “China’s rise”, its military, its nuclear weapons and its blatant nuclear proliferation is funded by Walmart at the cost of local American businesses.

India has not gone down this offshore model – far from it “Make in India” and “Aatma Nirbhar Bharat” are meant to be the exact opposite of this and spur job creation and economic activity in India. Yet, we find that Amazon has effectively mutated into a Walmart in India and is having the same crippling impact.

In the US, at least a flourishing business environment allows the creation of alternate employment and an ever-increasing horizon of new business opportunities. In India, even these alternatives are non-existent.

Be it the compliance cost of GST; or the ongoing extortion of small businesses by GST officials who reclassify products at will, without consequence or accountability even when their classification is found to be wrong; to bearing a disproportionate burden during demonetisation given the nature of the informal economy in an overwhelmingly low disposable income country; small business have been through an absolute nightmare.

Even today, the regulatory burden of scaling up micro and small operations is so cumbersome and prone to localised extortion that businesses prefer keeping their workforce off the books. In such an environment, Amazon is not only destroying extant jobs, but effectively diverting manufacture to China – a country that just last year killed 20 Indian soldiers.

Conveniently, they have avoided disclosing country of origin to customers. They were fined a paltry Rs 75,000 and continue to not display the country of origin of their Amazon branded products on the website and app.

What’s worse, this is the same Amazon whose subsidiary, the Washington Post, has a policy of employing and empowering the worst non-factual India baiters and use it as a weapon to subtly threaten the Indian government for quid-pro-quo in business regulation. This would also be the same government whose bureaucrats assiduously use every bureaucratic trick to avoid disclosing which of their progeny are studying abroad, under which scholarships instituted and decided by boards, gently nudged by which major industrial conglomerates and funders.

Curiously enough, this is the same Amazon that has teamed up with arch rival Flipkart to oppose regulatory action while at the same time, undermining sovereignty by approaching Singapore for arbitration against a counter consolidation by Reliance acquiring Future Group’s retail arms like Big Bazaar and the like.

At some point, this relentless assault on Indian jobs and business needs to be stopped. The government needs to realise exactly how compromised its bureaucrats who mask corruption under the guise of incompetence are. At some point, the BJP, known for long as the “bania party”, needs to start taking its core constituency seriously, lest it be accused of deliberately acting to weaken the RSS.

At any rate this is suicidal, as even though the BJP has a done a remarkable job of expanding its voter base, losing a core element to appease lawless, corrupt, malignant, foreign marauders is never smart politics.

Disclaimer:Abhijit Iyer-Mitra is Senior Fellow at the Institute of Peace and Conflict Studies. Views expressed are personal.

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first published:June 15, 2021, 13:21 IST