The ecommerce giants investing billions have transformed the retail landscape of India in recent years. But it should be noted that Indian regulations don’t allow Amazon and Flipkart to stock goods; they can only act as intermediaries by offering marketplaces to other sellers to sell their goods on their platforms, said Minister of Commerce and Industry Piyush Goyal.
However, the small retailers of India have alleged that these giants are bypassing the regulations using the loopholes. Goyal pointed out Amazon’s business strategy and alleged that its investment in India has often been used to cover its business losses.
He said at an event in New Delhi, "When Amazon says we are going to invest a billion dollars in India and we all celebrate, we forget the underlying story that the billion dollars is not coming in for any great service.".
He added, "do the losses not smell of predatory pricing to any of you... what was that loss for? They are not allowed to sell to consumers (directly).”
It is not the first time that Goyal lashed out at these e-commerce giants. In 2021, he said companies were using their scale and access to large pools of low-cost capital "to the detriment of mom-and-pop stores" and that they "very blatantly flouted" laws.
A Reuters investigative report from 2021 revealed that Amazon's internal files indicated the US online retail giant assisted a select group of vendors to thrive on its Indian platform, providing them with reduced fees and enabling them to circumvent foreign investment regulations.
At the time, Amazon assured that it adhered to local laws and denied giving preferential treatment to any seller. However, it later emerged that two of Amazon's major vendors involved in these claims would stop selling products on its platform.
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