Amazon's Investment In India Is For Its Own Loss Recovery, Not To Support Economic Growth: Piyush Goyal

Piyush Goyal questioned Amazon’s intentions, alleging that the company's multi-billion-dollar losses could indicate predatory pricing practices that harm India's small retailers

Commerce and Industry Minister Piyush Goyal raised serious concerns on Wednesday over Amazon's announcement of a $1 billion investment in India, suggesting that the US e-commerce giant was simply trying to cover its substantial losses in the country rather than contributing significantly to the economy. Goyal expressed his skepticism about the company's business model during the launch of a report titled 'Net Impact of E-commerce on Employment and Consumer Welfare in India'.

The minister questioned Amazon’s intentions, alleging that the company's multi-billion-dollar losses could indicate predatory pricing practices that harm India's small retailers.

“When Amazon says they’re investing a billion dollars, we celebrate, but we forget that it’s just a cover for their billion-dollar losses in India,” Goyal said. “Their balance sheet shows massive losses, and we need to ask ourselves — are these losses the result of predatory pricing?”

Goyal went on to criticise the e-commerce sector, suggesting that such practices are eating into the business of mom-and-pop stores across the country, particularly when it comes to high-margin products that small retailers rely on to survive.

Additionally, Goyal voiced concerns over the social disruptions caused by the rapid growth of online retail. He highlighted the decline of small businesses in Western countries, urging caution and calling for a more organised approach to e-commerce in India.

“We’ve seen the consequences of this in the West — small stores disappearing. In India, we cannot afford to cause the same disruption to our 100 million small retailers,” Goyal stated. He also drew attention to the potential negative effects of cloud kitchens and online pharmacies, warning of their impact on traditional restaurants and pharmacies.

The minister’s remarks come amid increasing competition between Amazon India and other e-commerce players like Flipkart, Meesho, and grocery delivery start-ups such as Blinkit, Swiggy’s Instamart, and Zepto. Amazon had previously committed to investing an additional $15 billion in India, bringing its total planned investment to $26 billion.

However, Goyal made it clear that he does not align with the findings of the report released during the event, which assessed the impact of e-commerce on employment and consumer welfare. “I completely disassociate myself from this report,” Goyal said, questioning the accuracy of its conclusions and the statistics used.

Despite his criticisms, Goyal acknowledged that technology and e-commerce have a role to play in India’s economy, provided they are implemented in a way that benefits the majority of the population without causing undue harm to traditional retail sectors.