New Delhi (Reuters) – Amazon hasn’t done India any big favours by announcing a new $1 billion investment, its trade minister said on Thursday, laying bare tensions with the U.S. online retail giant during a visit to the country by its CEO Jeff Bezos.
Amazon and Walmart’s (WMT.N) Flipkart are facing mounting criticism from India’s brick-and-mortar retailers, which accuse the U.S. giants of violating Indian law by racking up billions of dollars of losses to fund deep discounts and discriminating against small sellers. The companies deny the allegations.
Bezos said on Wednesday Amazon would invest $1 billion to bring small businesses online in the country, adding to the $5.5 billion the company had committed since 2014.
“They may have put in a billion dollars but then if they make a loss of a billion dollars every year then they jolly well have to finance that billion dollars,” Indian trade minister Piyush Goyal told a security conference in New Delhi.
“So it’s not as if they are doing a great favour to India when they invest a billion dollars.”
Amazon did not respond to a request for comment.
Ahead of Bezos’ visit, the Competition Commission of India launched a probe into Amazon and Flipkart to look at allegations of deep discounting and whether the companies discriminate against small sellers.
The allegations were “an area of concern for every Indian”, Goyal said.
India only allows foreign e-commerce firms to operate marketplace platforms where third-parties sell goods to retail consumers. Small retailers say Amazon and Flipkart circumvent those rules by creating proxy sellers or vendors through which it offers deep discounts, allegations the companies deny.
Goyal welcomed Amazon’s investment over recent years, but questioned whether the funds merely covered losses incurred through discounting.
