Shocking! This Is How Amazon Bypassed FDI Rules In India; Fooled All Sellers, Broke Regulations

A full-fledged report has been released stating different strategies and nooks used by the American e-commerce giant, Amazon, to circumvent India’s increasingly tough foreign investment rules, affecting e-commerce.

In a report published by Reuters, the e-commerce giant can be seen adjusting its corporate structures each time the government imposed new restrictions to protect small Indian traders.

Reuters reviewed Amazon’s internal company documents from years 2012-2019 and found it circumventing India’s foreign investment rules, by engaging into different means.

The Narendra Modi government is playing a crucial role towards building a support base for small Indian retailers, who have long alleged international ecomm giants like Amazon, to indulge into predatory pricing and unfair market practices, generating heavy losses to such traders.

We have covered numerous articles to support the statement. 

India is a major contributor to Amazon’s business. Reuters states that a document of this nature, depicting Amazon’s various strategies to dodge Indian regulators, could make it difficult for the company to operate peacefully in the country.

While many Indian traders and retailers have alleged Amazon to support a only few big sellers in the country, the e-comm platform clarified via a written statement that it has always complied with the law in India, further stating that as government policies continued to evolve, they had to change their operations too, to “ensure compliance at all times.”

Amazon also stated that it does not give preferential treatment to any seller on its marketplace and treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory.

Key Findings of the Report

• As per Amazon’s internal documents, it has helped a set of sellers boom in business, giving them discounted fees, thereby using them to circumvent India’s regulatory restrictions on foreign investment aimed at protecting small traders.
• In 2019, Amazon had over 400,000 sellers in India. During this period, about 33 sellers on Amazon made up about a third of the value of all goods sold on the company’s website.
• In conjunction with these 33 Amazon sellers, 2 more big sellers/merchants on the platform were found to have indirect equity stakes linked to Amazon, which accounted for around 35% of the platform’s sales revenue in early 2019.
• This means, as per the documents of 2019, only 35 out of over 400,000 Amazon sellers in India, accounted for around two-thirds of its online sales.
• While the company publicly states that all the sellers on its platform operate independently, the documents show otherwise, stating that it exercised significant control over the inventory of some of the biggest sellers on Amazon.in.
• The documents also reveal that Amazon helped Cloudtail cut special deals with big tech manufacturers Apple Inc. Amazon has an indirect equity stake in Cloudtail.