NEW DELHI: Commerce and industry minister Piyush Goyal on Wednesday accused large e-commerce players, such as Amazon, of indulging in predatory pricing to grab a bigger share and violating FDI rules, while calling for a review of policies to ensure that small shops were not put out of business because of the rapid growth of online commerce.
Goyal alleged that Amazon was passing off fund infusion to write off losses as investments into the country. “If you make Rs 6,000 crore loss in one year, does it not smell of predatory pricing to any of you? What is the loss for, they are not allowed to do any B2C (sales). E-commerce platforms legally cannot do any business with consumers,” he said.
Current FDI rules do not allow foreign-owned entities such as Amazon or Walmart controlled Flipkart to sell directly to consumers or hold inventory. They are only allowed to set up platforms where sellers can hawk their goods. In the past, too, Goyal has raised doubts over the operation of e-commerce companies.
‘Norms flouted with help of Indian entities’
Accusing large e-commerce players, such as Amazon, of indulging in predatory pricing and violating FDI rules, Goyal said, “When Amazon says ‘we are going to invest $1 billion in India’ and we all celebrate, we forget the underlying story that the $1 billion is not coming for any great service or any great investment to support the Indian economy. They made a $1 billion loss in their balance sheet that year, they have to fill in that loss.” He was speaking at an event organised by Pahle India Foundation.
Goyal said that the norms were flouted with the help of Indian entities to show the transactions as B2B sales. “When they get caught, they start closing down those entities. But they only reroute business through an entity to show that it is business-to-bu siness, but the reality is all of you buy on these platforms when B2C is not allowed. Should this not be a matter of concern for all of us?”
He also raised doubts over Rs 1,000 crore allegedly paid by Amazon to professionals.
“I don’t know who those professionals are. I am myself a chartered accountant, I have done law, but I would love to know which CAs and lawyers get Rs 1,000 crore, unless you are paying all the top lawyers to block them so that nobody can fight a case against you.”
The minister said that ecommerce platforms are focused on high-margin products, which hurt millions of small retailers, and said that numbers indicated that online sales could be around half the retail market in the country. “I don’t see it as a matter of pride that half our market could possibly become part of the e-commerce network in 10 years. It’s a matter of concern,” he said, pointing to mom-and-pop shops closing down in US and Europe.
He said large stores by companies such as Apple had also resulted in mobile stores shutting down in the country.
“Technology is a means to empower, innovate, to meet consumer requirements. We will have to see that it grows in an orderly fashion, we will have to see that this connectivity, this convenience is citizen-centric, it democratises or socialises the benefit to a larger section of society… (and), we don’t land up causing huge disruption for the 100 million small retailers across the country who also serve,” Goyal said.
