Jeff Bezos to visit India in January, may meet PM Modi

NEW DELHI: Jeff Bezos, the founder of Amazon, will visit India in January when he is
likely to meet Prime Minister Narendra Modi. During his visit he will kick off the US
retailer’s annual event around small and medium enterprises, which are perceived to be
hurt by deep-pocketed ecommerce companies.

The world’s largest online retailer is said to be worried about the changing ecommerce
rules in India, where the Seattle-based company has invested more than $5 billion and
created one of its largest foreign subsidiaries.

Bezos comes calling amid protests by a group of small traders against foreign-funded
ecommerce companies. The Amazon founder is expected to highlight that it is generating
jobs in India and empowering SMEs and other small businesses, according to two people
familiar with the matter. He will also raise aspects such as stable business environment
and policy continuity for foreign companies, they said.

“We do not have any plans to share at present for this,” an Amazon spokesperson said in an emailed response to a questionnaire
regarding Bezos’ upcoming visit.

The outcry against ecommerce companies escalated after the Diwali festive season, when small traders accused Flipkart and Amazon
of “unfair business practices” and violation of foreign direct investment rules. They blamed the predatory pricing strategies of the two
foreign-owned marketplaces for a slump in traditional retail business during Diwali.

Flipkart and Amazon generated combined sales of Rs. 31,000 crore ($4.3 billion) during the 15-day festival period in October, according
to a report by Red Seer Consulting.

The government has been stepping up its scrutiny of Amazon and its India rival Flipkart over their compliance with India’s foreign direct
investment laws for ecommerce marketplaces.

The commerce ministry had asked Amazon and Flipkart to furnish details including their shareholding, subsidiaries, business structure
and information on their top sellers and their tax details.

Amazon and Flipkart have responded to the questions raised by the government and maintain that they are in full compliance with FDI
legislation.

“It is a huge distraction for us,” a senior ecommerce executive said, asking not to be identified. Amazon has reasons to be nervous. The
US giant considers India its fastest-growing market with a potential to reach $10 billion in gross merchandise value and outpace the UK,
Germany and Japan as its largest overseas subsidiary. In October, Amazon pumped in Rs. 2,800 crore into the flagship Amazon, in
marketplace after injecting Rs. 9,450 crore in the unit last year.

So far, Amazon has invested more than $5 billion in India. “The various twists and turns in policies and caveats over the years have
created ambiguity and room for interpretation as to what is allowed under the ambit of foreign investment,” said Devangshu Dutta, CEO
of retail consultancy Third Eyesight.
“If any foreign-owned or foreigninvested entity is operating in the fuzzy zones of policy and law, there is bound to be concern.
‘Interpretation’ is a double-edged sword — on the plus-side it can give businesses strategy flexibility, but the downside is that
government officials can also interpret it strictly.”

In October, Walmart CEO Doug McMillon had written to Modi, seeking certainty and a predictable business environment in India.

Last year, Walmart had purchased Flipkart, India’s largest ecommerce entity, for $16 billion, bringing the US adversaries to a direct fight
over market share in the nation’s burgeoning online retailing market.

Following Walmart’s acquisition of Flipkart, India amended the FDI rules for online marketplaces in December, plugging many holes that
Amazon and Flipkart are alleged to have misused. Opponents of foreign-funded ecommerce accuse both the global titans of virtually
running inventory-led ecommerce, which India bars.

The legislation called Press Note 2 restricted bulk purchases by any vendor from any entity or group company of marketplace to 25%.
The rules banned any financial affiliate of the marketplace operator from selling on such platforms. These changes came as blows to
Amazon and Flipkart as they either sold through partner entities or through independent vendors that sourced directly from wholesale
units related to the FDI-funded marketplaces.