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regular-article-logo Wednesday, 06 November 2024

Piyush Goyal blasts online retailer Amazon for engaging in predatory pricing practices

Minister said the sector’s rapid expansion could cause significant social disruption and is a cause for concern rather than celebration

Our Special Correspondent New Delhi Published 22.08.24, 06:02 AM
Piyush Goyal

Piyush Goyal File picture

Commerce minister Piyush Goyal on Wednesday blasted online retailers — particularly Amazon — for engaging in predatory pricing practices that threaten to upend the country’s traditional retail sector.

The minister said the sector’s rapid expansion could cause significant social disruption and is a cause for concern rather than celebration. He was speaking at an event organised to mark the growth of e-commerce in India.

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“The country celebrates when firms such as Amazon announce investments worth billions of dollars. However, these investments are not coming to support the Indian economy,” Goyal said.

He criticised predatory pricing strategies designed to eliminate competition, as well as the broader social implications of the burgeoning online delivery culture, which he suggested includes the unregulated delivery of drugs to minors.

The minister’s most direct criticism was aimed at Amazon. The online retailer reported 6,000 crore loss in India last year, which he insinuated was a clear sign of predatory pricing. “If you make a 6,000-crore loss in one year, does that not smell like predatory pricing to any of you?” Goyal said.

He said Amazon’s much-publicised billion-dollar investment in India might be less about supporting the Indian economy and more about covering these losses.

“We do not have a comment on this development as of now,” Amazon said on Goyal’s views.

Goyal questioned Amazon’s significant investments in India, framing the company’s financial behaviour as potentially harmful to the country’s retail landscape.

He accused Amazon of exploiting regulatory loopholes to operate in ways that he suggested were legally dubious.

Indian law prohibits e-commerce platforms from engaging in direct business-to-consumer (B2C) transactions. But Amazon has structured its operations to skirt these rules

“They create entities where Indians contribute to making these entities. Then they get caught and start closing those entities, only to re-route the business through another entity to show it as B2B,” he said. This practice, he implied, allows Amazon to mask its true operations and continue dominating the consumer market in India.

The minister’s critique extended to Amazon’s financial disclosures, particularly the significant sum attributed to payments made to professionals — 1,000 crore.

“I don’t know who these professionals are... I want to know what kind of lawyers and CAs get 1,000 crore, unless you’re paying all the top lawyers to block them, so nobody can fight a case against you,” Goyal said.

The minister expressed broader concerns about the impact of e-commerce on India’s traditional retail sector. He noted that while e-commerce in India is growing rapidly—with projections of 27 per cent annual growth—the benefits of this growth are not evenly distributed.

“E-commerce is edging and wedging into high-margin products,” he said, pointing out that these products are critical for the survival of small retailers. The minister warned that the unchecked expansion of e-commerce could have devastating consequences for over 10 million small retail stores across Indian cities.

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