India minister accuses Amazon, e-commerce firms of predatory pricing

[August 21, 2024]  By Aditya Kalra and Shivangi Acharya

NEW DELHI (Reuters) - India's commerce minister accused Amazon and other e-commerce companies of predatory pricing practices and said the sector's rapid rise should not disrupt millions of brick-and-mortar stores operating in the country.

Amazon and Walmart's Flipkart have reshaped India's retail landscape in recent years, with both companies investing billions of dollars to expand and get consumers to their platforms which offer lucrative discounts.

Indian regulations prohibit Amazon and Flipkart from stocking goods and selling directly to consumers, and they can only operate a marketplace for other sellers to offer products. However, small retailers have often alleged that the regulations are bypassed using complicated business structures.

Commerce Minister Piyush Goyal on Wednesday signaled out Amazon's business practices and said the company's investments in India have often been used to cover its business losses.

Goyal, however, did not provide any evidence to substantiate the claim.

"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," Goyal said at an event in New Delhi, where he did not name any other company.

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)," he added.

Amazon and Flipkart did not respond to requests for comment.

Amazon Shopping and Flipkart apps are seen on the smartphone in this picture illustration taken, July 30, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

Amazon in June last year said it will increase its India investments to $26 billion by 2030, including for its cloud business. It is also targeting merchandise exports worth $20 billion from India by 2025.

Goyal has in the past attacked U.S. e-commerce giants publicly. 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 special report in 2021 found Amazon's internal documents showed the U.S. e-commerce company helped a small number of sellers prosper on its Indian platform, gave them discounted fees and used them to bypass foreign investment laws.

Amazon had then said that it is confident of local law compliance and it "does not give preferential treatment to any seller".

Subsequently, though, it was announced that two of Amazon's big sellers facing such allegations will stop selling products on its website.

"They create entities ... when they get caught they start closing down those entities," Goyal said on Wednesday.

Amazon and Flipkart are also facing an antitrust investigation in India but deny any wrongdoing.

(Reporting by Aditya Kalra and Shivangi Acharya; Editing by Shounak Dasgupta)

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