23rd May 2021
Image courtesy- thewrap.com
Amazon is facing allegations for flouting India’s FDI (Foreign Direct Investment) policy, the US govt has rushed to defend the companies giant e-commerce practices.
Only 35 sellers accounted for two-third of gross sales on Amazon, as per the notice which came in February. Amazon is a shareholder and Cloudtail and Appario are accountable for one-third of gross sales on the platform.
As a result, allegations are made against the massive e-commerce website.
The Enforcement Directorate and the RBI are now investigating Amazon and Flipkart for similar charges.
While several lobbying groups, including the Confederation of All India Merchants (CAIT), the All India On-line Distributors Affiliation (AIOVA), among others, have accused Amazon of circumventing Indian FDI laws, a Reuters article published on February 17 this year was the final straw. According to the survey, only 35 sellers accounted for nearly two-thirds of all gross sales.
Amazon has been defying the norms of Indian FDI policies for more than five years and this has been a matter of dispute between the Indian government and the American government.
The previous government always maintained silence over the issue. However, the Biden administration has joined hands in the conspiracy with the big technology companies from day one, defying the actions of amazon.
It was also included that, in early 2019 some 33 Amazon sellers accounted for a couple of a third of the worth of all items offered on the website. In the same time span, two sellers — Cloudtail and Appario — of which Amazon had indirect stakes accounted for about 35 percent of the platform’s revenue from gross sales.
According to Press Notice 2, which announced the FDI rule changes in December 2018, foreign e-commerce companies are prohibited from selling products from retailers. They have a clear interest in avoiding any preferential treatment. To get away with it, Amazon had reduced its ownership of the above-mentioned sellers to 24 percent. As a result, these businesses were not Amazon grocers.
Image Courtesy- abcnews.go.co
It was also included that, in early 2019 some 33 Amazon sellers accounted for a couple of a third of the worth of all items offered on the website.
In response to the report that was relieved that Biden’s administration member John Kerry, who was scheduled to have a meeting with Indian Union minister of trade and commerce Piyush Goyal on some unrelated matter on February 18th.
Thomas Carnegie, a US official in New Delhi emailed an official at the USA Commerce Representatives (USTR) on February 18 saying, “This might come up within the name since as you understand Minister Goyal is vulnerable to deliver up tangential subjects.”
US embassy officials Phillip M. Ingenerie informed the USTR officials that he “ verified” the content ready for Kerry with Amazon India’s authorities affair as “true and correct.”
The US embassy in New Delhi also referred questions to the US Department of State in Washington, which stated that any issues about US e-commerce companies’ activities in India will be investigated by the Competition Commission of India (CCI) “with the identical stage of independence, transparency, and professionalism it has demonstrated before now.”
More importantly, Indian head Amit Agarwal had known as the Reuters’ report, printed on February 17, “ unsubstantiated, incomplete and factually incorrect”. He is said to have emailed employees, assuring them that Amazon has always complied with Indian legal requirements and that they should continue with the action. “We haven’t seen the paperwork referenced and Reuters hasn’t shared provenance to substantiate veracity—the main points are seemingly provided with malicious intent to create sensation and discredit us,” he added within the mail.
Enforcement Directorate (ED), Reserve Financial institution of India (RBI), and others are currently investigating Amazon and its competitor Walmart owned by Flipkart.