NEW DELHI: Minister of Commerce and Industry Piyush Goyal on Wednesday made no bones about his ‘disapproval’ of the predatory pricing practices adopted by US e-tailer Amazon.
Speaking at an event in New Delhi on the impact of e-commerce in India, Piyush Goyal stated that Amazon’s investment of a billion dollars in India is not a cause for celebration, as it is merely compensating for the losses incurred due to predatory pricing.
“When Amazon says they are going to invest a billion dollars in India, and we all celebrate, we forget the underlying story that the billion dollar is not coming in for any great service or any great investment to support the Indian economy. They made a billion-dollar loss in their balance sheet that year. They have to fill in that loss,” the Minister of Commerce and Industry said. He said that if you (Amazon) make Rs 6,000 crore losses in a year, it smells of predatory pricing.
It should be noted that Amazon Seller Services, the marketplace business of Amazon India, reported a 33% increase in net losses in FY23 to Rs 4,854 crore, up from Rs 3,649 crore the previous year.
Amazon has pledged $15 billion additional investment in India by 2030, taking its total investments in the country to $26 billion. Amazon CEO Andy Jassy had made this announcement during Prime Minister Narendra Modi’s US visit in June 2023.
However, Goyal seemed unimpressed by the US retailer’s large claims. Sharpening his attack on Amazon, Goyal said the company paid thousands of crores to professionals. “I don't know who these professionals are. I am a chartered accountant and have studied law, but I would love to know which chartered accountants and lawyers get Rs 1,000 crores unless you are paying all the top lawyers to block cases so that nobody can fight against you,” said Goyal.
Goyal was probably referring to claims made by Confederation of All India Traders (CAIT) in 2021, when the trader association had said that Amazon had paid $1.2 billion (Rs 8,456 crore) towards legal expenses during FY19 and FY20.
Amazon denied those reports, stating that its legal expenses constituted a minuscule part of the overall expenses. The company clarified that it incurred Rs 1,967 crore in total legal and professional expenses in FY20.
When asked to respond to Goyal’s diatribe against the company, an Amazon spokesperson said it does not have ‘a comment on this development as of now’.
Meanwhile, Goyal expressed his concern over the growing influence of e-commerce on India's traditional retail sector and its potential impact on employment. The Minister highlighted the possibility that half of India's market could become part of the e-commerce network in the next decade, a development he described as a matter of concern.
He expressed his concern about the impact of e-commerce on local businesses and employment, particularly in sectors like pharmacies and mobile phone repair shops. He, therefore, urged the business community and experts to carefully study and evaluate the impact of E-commerce in context of the needs of the country in a detailed and scientific manner.