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Jeff Bezos plans a damage control trip to India

Combined sales of Amazon India and Flipkart during the festive season sale amounted to USD 4.3 billion.

Photo via Shutterstock

Three years after Amazon’s founder and CEO came to India on a positive note to announce an investment of USD 3 billion in his India unit, Jeff Bezos is coming to India early next year to meet Indian Prime Minister Narendra Modi at a time when protests from India’s multiple offline trading bodies against the e-tailer is growing every day.

According to a local media Economic Times, that cited two sources, Bezos is planning to visit India in January 2020 for the company’s annual event for small and medium businesses.

The recently concluded festive season sales that saw Amazon India and Walmart-owned Flipkart collectively raking USD 4.3 billion in sales has again opened the Pandora’s box of India’s new FDI (Foreign Direct Investment) rules–a bone of contention for both the online marketplaces.

Taking matters into its hand, offline trader’s body CAIT (Confederation of All India Traders), approached the Ministry of Commerce and Industry, alleging that smaller sellers have suffered “a loss of about 50% in recent Diwali festive season due to malpractices of e-commerce players those who are indulging in predatory pricing, deep discounting, controlling inventory, influencing prices and preferential treatment to few sellers.”

According to a recent statement by CAIT, the Diwali festive sales for offline traders across the country went down to USD 41.7 billion this year as compared to USD 83.4 billion every year.

In February 2019, India had implemented new FDI rules for online marketplaces that imposed several restrictions including a ban on steep discounts, forging exclusive partnership with manufacturers, among many others.

Bezos’ visit to India also signifies the ever-growing importance the country has in the company’s overall scheme of things. Ever since Amazon shut down its decade-old domestic marketplace in China, the world’s second-largest economy with the USD 1 trillion e-commerce market, India is the only biggest market that it has got to play in.

However, over the last two months, Amazon has been on the Indian government’s radar for allegedly violating e-commerce regulations with its predatory-pricing during the festive season in the country and its initiatives to promote exclusive private labels.

Following the complaints from CAIT that claims to represent 70 million traders, the ministry asked Amazon India and Flipkart to furnish details regarding their shareholding, subsidiaries, business structure, and names of their top sellers.

Talking to reporters last week, Bezos said, “Regulatory stability is the thing that we would always hope for India. Whatever the regulations are … they are stable in time and that’s one of the things we’re hoping will now be true. We’ll see.”

Currently, the Indian e-commerce market is estimated to be worth USD 30 billion, according to research firm Forrester. Another consulting firm RedSeer has projected online retail to touch USD 89 billion by 2023.

“India is the biggest opportunity for Amazon and Walmart. There is no other equivalent market globally which they can capture. If they move beyond the US, they can’t go to China. There are limited opportunities in the European market and Africa is still going to take time,” Satish Meena, analyst at Forrester, told KrASIA in a recent interview.

“They are in the market for the long run, so they will keep investing, whether it will take the five years or 10 years to start earning money.”

Since its entry into the Indian market in 2013, the Seattle-based company has invested a total of USD 4.73 billion in the Indian marketplace Amazon Seller Services, including USD 862.8 million this year so far.

Bezos is not the only one worried about anticipated changes in regulations that India wants to implement for leveling the playing field. In October, Walmart CEO Doug McMillon wrote to Prime Minister Narendra Modi asking for a stable and predictable business environment in India.