Amazon $1 billion investment in India not a favor, minister says

India’s trade minister Piyush Goyal criticized Amazon.com Inc. and welcomed an investigation into the e-commerce giant’s possible “predatory pricing and unfair trade practices.”

The comments came in the midst of Amazon founder Jeff Bezos’s India visit.

“They may have put in a billion dollars,” Goyal said on Thursday, about Amazon’s investments in India. “But then if they make a loss of a billion dollars every year then they jolly well have to finance that billion dollars. So it’s not as if they are doing a great favor to India when they invest a billion dollars.”

Bezos had announced Wednesday that the company plans to invest $1 billion to help digitize small and medium businesses in India.

Goyal’s comments at the Raisina Dialogue in New Delhi, where foreign ministers from a dozen nations are in attendance, were also an indication that Prime Minister Narendra Modi’s government is trying to safeguard the interests of smaller Indian traders, the traditional voter base of his Bharatiya Janata Party.

Bezos’s ongoing two-day India visit has been marked by demonstrations from small local retailers who are protesting Amazon’s traditional cut-price approach and exclusive-selling practices. More than half-a-million traders representing thousands of organizations grouped under the Confederation of All India Traders have planned sit-ins and public rallies in 300 cities to protest his visit, the group had said.

India restricts foreign direct investment in multi-brand retail and this has forced Amazon and Walmart-owned Flipkart, the two biggest e-commerce players in India, to overhaul business models to comply with new rules introduced in December 2018, after complaints from traders.

Goyal mentioned the ongoing probe by the Competition Commission of India into companies like Amazon and questioned why an e-commerce marketplace should make losses.

“Anybody who tries to use the e-commerce marketplace model to get into the multibrand retail space surreptitiously will have to be questioned, will have to be investigated,” he said.

In 2016 New Delhi said foreign-owned e-commerce platforms could operate as marketplaces — facilitating transactions between sellers and consumers — but not sell directly. Flipkart and Amazon established wholesale networks to reach their customers. But the new rules target this workaround, banning foreign e-commerce sites from selling goods from companies in which they own a stake.