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Amazon’s founder and CEO Jeff Bezos is currently on a India tour and the world’s richest man made the start to his India tour with a bang, announcing a fresh $1 Bn investment in the country. Conventionally, this should have cheered up the Modi government, especially when the Indian economy is witnessing a slowdown.
But Amazon’s investment overtures was surprisingly greeted with rather ungenerous remark by Railway and Commerce minister Piyush Goyal. Goyal, who is widely considered as one of the close confidants of Prime Minister Modi, said “Amazon is not making a big favor by announcing $1 Bn investment in India.”
Modi government has always taken immense pride in touting itself as an investor friendly government and therefore commerce minister’s stinging remark took everyone by surprise. No less than Prime Minister Modi has been known to be meeting big business tycoons with an open arm while his special rapport with the Indian corporates is now pretty well known.
But then what really forced one of Modi’s favorite ministers to go for an offensive against Amazon, particularly when every penny of foreign investment counts for boosting the sagging economy.
Tensions between E-commerce companies and Indian Government
Since last year tensions have been brewing between E commerce companies and Modi government over former’s alleged indulgence in predatory pricing and deep discounting, which is evidently causing lot of losses to small traders and brick & mortar shop owners.
In 2019, Modi government introduced new FDI rules to discourage the practice of deep discounting and predatory pricing in the e-commerce industry. These newly implemented FDI rules have widely been labeled as tough and comprehensive. However, these rules (like all other government rules) are reportedly bereft with loopholes and sources within government claims that big players like Amazon are trying to capitalize on these loopholes.
There is every possibility that Amazon’s blatant act of flouting the rules may have ended up offending Goyal. Another theory that is doing the rounds is that the Modi government wants to protect the interest of small traders and shop owners, since they constitute a major vote bank for the ruling BJP. Protecting their interest is all the more important for BJP in the wake of upcoming Delhi elections.
Goyal Could have been more Diplomatic with his Statement
Notwithstanding Amazon’s alleged role in flouting FDI roles, the trade and commerce minister could have been more diplomatic with his words. This view has even resonated with the Indian corporate world. Although no well known Indian corporate personality has so far issued any statement on this issue, the buzz is that Indian corporate industry isn’t very happy with Goyal’s statement.
In the age of electronic media and social media, when controversial statements spreads like wildfire, Goyal could have been more wise with his words.
Modi government could have used proper diplomatic channels to convey their dismay to Jeff Bezos and avoid making public statements that could possibly antagonize foreign investors.
