Amazon has been dodging India's regulators all the while: report
19 February 2021
US online retailer Amazon Inc has been operating in India by circumventing all government regulations issued in the interests of the millions of small trades in the country, reports citing a strategy paper prepared by Amazon staff in India for Amazon.com Inc executive Jay Carney showed.
India has embraced a marketplace model for online retail platforms, under which these retailers act as a platform for facilitating sales by small businesses, manufacturers and suppliers of goods and services, in a bid to provide even ground for all.
However, retail giants like Amazon and Wal-Mart who felt suffocated by the marketplace model, have been scheming to dodge government regulations. This has been made clear in a recent report by Reuters, which cited a note prepared by Amazon employees in India for a meeting with India’s ambassador to the United States in Washington.
The meeting followed Government of India’s announcement of a new set of regulations regarding foreign direct investment in early 2019. Amazon felt the new regulations threatened to disrupt its business model in one of the world’s fastest-growing markets.
In their briefing of Carney before the meeting, Amazon employees, advised him to highlight the fact that Amazon had committed more than $5.5 billion in investment in India and how it provided an online platform for 400,000-plus Indian sellers. But cautioned not to divulge that some 33 Amazon sellers accounted for about a third of the value of all goods sold on the company’s website. That information, the note advised, was “Sensitive/not for disclosure.”
Some other company documents reveal that two sellers on the e-commerce giant’s India platform — merchants in which Amazon had indirect equity stakes — accounted for around 35 per cent of the platform’s sales revenue in early 2019. That meant these two accounted for some 35 of Amazon’s more than 400,000 sellers in India.
Amazon in its public messaging has been projecting itself as the friend of small business in India and claiming in one of its marketing slogan in India, it is “transforming lives, one click at a time.”
The incriminating documents could add to the risks facing the company as the Indian government intensifies scrutiny. The documents reveal that for years, Amazon has been giving preferential treatment to a small group of sellers on its India platform, publicly misrepresented its ties with the sellers and used them to circumvent increasingly tough regulatory restrictions here.
Indian traders, both brick-and-mortar and smaller online sellers, have long alleged that Amazon’s platform largely benefits a tiny number of big sellers and that the American giant engages in predatory pricing that has crushed legions of retailers.
Amazon, however, says it complies with Indian law, which stipulates that an e-commerce platform can only connect sellers to buyers for a fee, unlike in the United States, where Amazon can both act as middleman and sell goods directly to consumers.