Why Amazon's request to ease foreign-investment rules is being opposed
What's the story
Indian retailers and farmer groups have urged the government to reject Amazon's request for easing foreign investment rules related to exports. The groups argue that allowing Amazon direct procurement would threaten smaller businesses due to its financial strength and potential for predatory pricing. This comes as India currently prohibits companies like Amazon and Walmart from directly stocking and selling goods to consumers.
Policy debate
Amazon lobbying for policy change
Amazon has been lobbying the Indian government to ease these rules for exports. The proposed change would allow Amazon India to buy goods from sellers directly for international customers. However, this has been a contentious issue between New Delhi and Washington, with policy restrictions faced by Amazon and Walmart being a sore point in their relations.
Risk assessment
Farmers and retailers warn of predatory pricing
Over 30 Indian farmers and retailers groups, along with Switzerland-based labor union UNI Global, have written to India's commerce ministry. They argue that allowing Amazon direct procurement for exports could harm smaller players' businesses due to the US firm's financial strength. The letter warns that "Amazon's direct procurement for exports would give it an unrivaled capacity to undercut these groups through predatory pricing."
Regulatory scrutiny
Amazon's stance and India's antitrust concerns
In a closed-door meeting last month with Indian officials, Amazon argued that permitting it to directly export products would benefit small sellers. The company claimed they would get help in custom clearance processes and have wider access to international markets. However, India's antitrust regulator had previously found Amazon violated competition laws by favoring select sellers and deep discounting some products, including selling them below cost price.