Amazon is not doing India a favour by investing a billion dollars, said Piyush Goyal, Minister of Commerce and Industry, a day after the e-commerce giant’s founder and CEO Jeff Bezos announced the incremental investment in the country.
Speaking at the Raisina Dialogue 2020, an annual event organised by the Observer Research Foundation, Goyal said on Thursday, “they may have put in a billion dollars but then if they make a loss of a billion dollars every year, then they jolly well have to finance those billion dollars. So it’s not as if they’re doing a great favour to India when they invest a billion dollars.”
Bezos, considered the richest man in the world with a net worth of $117 billion, is in India for the first edition of his firm’s micro, small and medium enterprises focused event — Amazon Smbhav. In New Delhi, he announced the investment of $1 billion, in addition to the $5 billion Amazon has invested over the past five years.
The latest round of investment will go towards digitising 10 million MSME businesses in India, and help such firms export $10 billion worth of “Make in India” goods by 2025 through its platform.
However, Goyal was clearly not pleased with the announcement. Talking about the losses incurred by Amazon’s marketplace, he added that if the company was bringing in money “largely to finance its losses”, which amount to $1-1.5 billion a year at a turnover of $10 billion, then it raises the question of how the losses occurred.
The minister said firms need to explain how they incur these losses in a marketplace model “unless they are indulging in predatory pricing or some unfair practices”.
Goyal also mentioned the ongoing inquiry ordered by the Competition Commission of India (CCI) into the practices of Amazon and Flipkart, the two largest e-commerce players in India, and said companies are free to run their businesses in India as long as they follow rules.
“We have very strict rules about FDI (foreign direct investment) in multibrand retail, where only 49 percent is allowed, and anybody who tries to use the e-commerce marketplace model to get into the multibrand retail space surreptitiously will have to be questioned and will have to be investigated,” he said, adding that e-commerce firms should follow the “letter of the law and the spirit of the law’.
Restrictions not wrong
Asked whether the move to curb palm oil flows into India targeted specific nations, Goyal said India was planning no such thing. “Any curbs that we put in, in the best interest of India’s trade and international trade, apply to all countries uniformly,” the minister said. Over 80 percent of India’s imported refined palm oil originates from Malaysia.
However, he reiterated that India plans to put in place restrictions on unknown imports, categorised as ‘others’. Official data show there were 2,433 cases classified under the “other” category or not clearly mentioned in the official trade classification handbook.
Many of these involved goods worth Rs 100 crore or more. But, not much information is available on what these are, government officials say. India follows the internationally standardised Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature to classify traded products.
“It’s only fair that all importers categorise their product, in their HSN code, and if there is a product that doesn’t fit into any of those codes, I have simultaneously announced that please approach us. We’ll create new codes or expand the existing ones,” Goyal said.
The issue has become important as the commerce department examines if Chinese goods are being routed to Indian markets through other nations. To find out what goods are exported under these categories, the commerce department has asked the revenue department to provide details of inbound shipments.
On the proposed Regional Comprehensive Economic Partnership (RCEP), which India turned down last year, Goyal said India had grave reservations about how China conducts trade and how it refused Indian exports access to its market through non-tariff barriers.
Goyal said India remains interested in pursuing a free trade deal with the European Union. European reservations on high import duties on wine and automobiles that had stalled talks earlier, have been addressed, Goyal added.
However, senior EU sources had told Business Standard earlier this month that the bloc remains firm that its concerns on investment protection will need to be addressed in any future bilateral deal. Goyal said he was looking forward to meet the newly appointed EU trade commissioner Phil Hogan.―Business Standard