During a trip In India in 2014, Amazon chief executive Jeff Bezos made a stunning announcement: his firm was $ 2 billion investment In the South Asian nation, exactly one year after starting operations in the country.
The Amazon announcement underscored how far India had come to open foreign companies. The nation, which largely closed doors to international giants amid independence in 1947, liberalized in 1991, has gradually transformed itself into the world’s largest open market.
In a television interview in 2014, Bezos stated that the perception about India was that it was not an easy place to do business. But Amazon’s growth in the country, he said, was evidence that this belief is not accurate.
“What are the odds? There are always obstacles. Wherever you go, every country has its own rules and laws, ”he said.
Six years, and Additional investment of over $ 4.5 billion later, Amazon today faces more barriers than ever in India, the second largest Internet market with over 600 million users.
Long-standing laws in India have constrained Amazon, which is yet to turn a profit in the country, and other e-commerce firms to hold inventory or sell items directly to consumers. To circumvent this, the firms have worked through a maze of joint ventures with local companies that operate as inventory-holding firms.
India got Fixing this flaw at the end of 2018 A move that was widely regarded as the biggest setback for an American firm in the country at the time. Amazon and Walmart-owned Flipkart scramble Distribute hundreds of thousands of items Made their investments in a more indirect way from their stores and in affiliated firms.
Now the nation is ready to toughen this approach. Reuters Reported Last week that New Delhi is considering adjusting certain provisions that would prevent affiliated companies from holding an indirect stake in a vendor through their parents.
Confederation of All India Traders, an Indian trade association that claims to represent over 80 million businesses, Told the publication That Indian Commerce Minister Piyush Goyal has assured the organization that it is working to address concerns about the alleged violation of the current rules.
The upcoming policy change is one of the many headaches for the world’s largest e-commerce firm in India.
Amazon is aggressively fighting to halt a deal between two of India’s biggest retail chains, its prestigious partners Future Group and Reliance Retail.
Last year, Future Group announced that it would sell its retail, wholesale, logistics and warehousing businesses Reliance Retail for $ 3.4 billion. Amazon, which in 2019 Bought stake in one of Future Group’s unlisted firmsSays that the Indian firm has breached its contract (which would have given Amazon the right of first refusal) and is engaged in insider trading.
Despite technology giants and investors raising over $ 20 billion to create the e-commerce market in India over the past decade, online retail still accounts for only one-digit pie of all retail in the country.
In recent years, scores of Amazon, Walmart and other startups have eclipsed this realization and sought to work with DotTos from thousands of cities, towns and villages in India.
Two subsidiaries of one of India’s largest corporates (Mukesh Ambani’s Reliance Industries), along with Reliance Retail and telecom giant Jio Platforms Enter the e-commerce market, And receive the support of global giants including Facebook and Google last year, Building a large stake in Future Group is one of the few ways that Amazon can accelerate its growth in India.
The American e-commerce firm has so far had little luck in reversing the deal between Indian firms. Last year, Amazon reached out to the Indian Antitrust Body Competition Commission of India and market regulator Sebi to stop the transaction. Both have bodies Ruled in favor Of Future Group and Reliance Retail.
Amazon should understand this outcome because it triggered legal proceedings An arbitration court in Singapore. It is no surprise that the firm chose to pursue its legal argument outside India as well.
Most cases that reach the Singapore International Arbitration Court Come from india In recent years. Vodafone, which has invested more than $ 20 billion in India, and has been dealt with Billions of dollars in unpaid taxes by country, Is another high-profile name for knocking on doors in Singapore. After losing in India, it emerged victorious in Singapore arbitration court last year.
Amazon on monday Filed a new petition In Delhi High Court in which it is seeking to implement the decision of SIAC (which last year ordered that the deal Must be temporarily halted) And prevent the Indian firm from moving the deal based on the decisions of CCI and SEBI.
The company alleges that Future Group “knowingly and maliciously” disobeyed the international arbitration decision from SIAC. In its petition, Amazon is also seeking the custody of Kishore Biyani, founder and chairman of Future Group.
“Assertive for Local”
As India suffered from the proliferation of coronaviruses last year, Prime Minister of India Narendra Modi urged 1.3 billion citizens to make the country “self-sufficient” and “be assertive to be local”.
In 2014, moving to the contrary in the first few years of assuming power, he pledged to welcome foreign companies to India more than before. In recent years, India has Many rules proposed or implemented American firms have been hurt, although none appear to suffer as much as Amazon.
Last year, New Delhi started imposing a 2% tax on all foreign bills for digital services provided in the country. The US Trade Representative said earlier this month that India was levying taxes on several categories of digital services that are “not applicable under other digital services taxes adopted worldwide.”
A USTR investigation found that the total tax bill of US companies in India could exceed $ 30 million per year. In conclusion, it found India’s digital tax move Incompatible with international tax principlesInappropriate and cumbersome, or restrict American commerce.
Modi’s new way of life for India will be music in the ears of Mukesh Ambani, the Prime Minister’s colleague and India’s richest man, Chairman of Reliance Industries.
Before selling bets of more than $ 20 billion in Jio Platforms and More than $ 6 billion in Reliance Retail To attract foreign investors, Ambani gave a speech in 2019, in which he urged the necessity Protecting the data of Indians in the context of patriotism.
“We must collectively launch a new movement against data colonialism. For India to succeed in this data-driven revolution, we must transfer control and ownership of Indian data back to India – in other words, return Indian money to every Indian. “
Why so many international companies have invested in many of Reliance’s assets is a big question. A senior executive at an American firm told TechCrunch on the anonymity situation (out of fear of retaliation) that the investment in Jio Platforms, India’s largest telecom network with around 410 million subscribers, and djjà for Reliance Retail vu is the moment. The nation, where one of the only ways to do business in the nation a few decades ago, was a large-scale political confrontation with a local firm.
In a series of tweets, Raman Cheema, A former policy executive at Google and who now works on the non-profit digital advocacy group Access Now, alleged that in 2011-12 the Android-maker weighed in and invested in a firm such as Reliance, an Indian political “Turn by turn” on risks. “
The idea raised concerns about Google’s values, he claimed. “More than one executive involved in those discussions noted concerns about Reliance’s reputation, particularly about the problematic attitudes that policy civil servants and politicians gain in the government’s business relationship with money, ethics Is in the direction. “
Amazon was The rumor Reliance was keen to get a multi-billion-dollar stake in retail last year, but it seems the two firms have stopped engaging in any case.
While Amazon resolves these issues, the firm suffered another setback last week. The Indian makers of a mini-series for Amazon Prime Video, as well as senior executives of the company, are in danger of criminal prosecution in the country after Modi’s ruling party has deemed it disrespectful to the Hindu majority section of the country.
A Hindu nationalist group, politicians with the ruling Bharatiya Janata Party, and a BJP group representing members of India’s lower castes were among those who polled the nine-part short series “Tandava” and the police against Amazon Report was filed. The company bowed under pressure and edited some scenes.
The real reason for the complaints against “Tandava” could be that the show keeps a mirror close to Indian society and some problems are attributed to Mr. Modi’s administration. In the opening episode, the show features students and disgruntled farmers, demonstrations echoing events in recent months, “The New York Times wrote.
“Mirzapur”, another show from Amazon, which also attracted a criminal complaint in India last week, for hurting religious and regional sentiments and bringing the Indian city into disrepute. Supreme Court of India holds Notice issued Seeks further responses from the makers of “Mirzapur”.
In the interview above, Bezos stated that Amazon’s job was to follow all the unique rules different countries need to comply with it and “adapt our business practice to those rules.”
In India, the company is being asked how far it is to adopt its business practices. How far it wants to lean, it no longer cares about the people of Amazon.