Commerce and Industry Minister Piyush Goyal on Wednesday questioned the announcement of a billion-dollar investment by e-commerce giant Amazon in India and said that the American company is not doing any big service to the Indian economy, but is compensating for the losses incurred in the country. He said that the huge loss incurred by Amazon in India actually reflects the market-distorting methods of selling products at very low prices. But this is not good for India, because it affects crores of small retailers.

Questions raised on the business model of e-commerce companies

Goyal, while releasing a report on the 'net impact of e-commerce on employment and consumer welfare in India', raised several questions about the business model of e-commerce companies. He said, "When Amazon announces to invest a billion dollars in India, we celebrate. We forget that these billions of dollars are not coming for a major service or investment in the Indian economy. The company had a loss of a billion dollars in its books that year and they had to make up for that loss."

Which CA or lawyer gets Rs 1000 crore?

"This loss was because of the payment of Rs 1,000 crore to professionals. I don't know who these professionals are. I would love to know which chartered accountant, professional or lawyer gets Rs 1,000 crore unless you pay all the big lawyers to stop them so that nobody can fight a case against you," the commerce minister said. He wondered if a loss of Rs 6,000 crore in a year was not an indication of keeping prices extremely low.

E-commerce is not allowed to do B2C business

It is just an e-commerce platform and those companies are not allowed to sell directly to customers (B2C). As per the established policy of the government, no e-commerce platform can do direct-to-customer business i.e. B2C business in the country. However, the minister alleged that these companies redirect all the business through one entity only to show themselves as B2B. He said, "How are they doing this? Shouldn't this be a matter of concern for us?" He said that the e-commerce sector has a role in the economy, but their role needs to be thought about very carefully and cautiously.

10 crore small shopkeepers should not suffer a loss

He also said that e-commerce companies are eliminating high-priced and high-margin products of small retailers, while small shops survive on their strength. The minister also expressed apprehension that if online retail business grows rapidly in the country, there will be a big social disruption with traditional shops. Citing the example of Western countries, he said that Europe and America have seen the results of this trend. Goyal said, "I do not deny that technology will play its role. Technology is a means of empowerment, innovation, meeting consumer needs but we also have to see that it moves forward systematically." He said that we do not want to create a big obstacle for the country's 10 crore small retailers in the race for 27 percent annual market share of online retailers.