WION Edit: Amazon's investment offer - options for India

Delhi Jan 16, 2020, 04.08 PM(IST) Written By: WION

CEO of Amazon Jeff Bezos gestures as he addresses the Amazon's annual Smbhav event in New Delhi on January 15, 2020. Photograph:( AFP )

Story highlights

For consumers, deep discounts are good news, but it sounds a death-knell for small businesses who struggle to compete with 'giant' discounts.

Anyone who has followed Amazon's India strategy will not be surprised by the latest investment offer of its CEO Jeff Bezos.

Six years ago, the same Jeff Bezos promised to invest $2 billion in India. Now, it's $1 billion.

But as we have seen, the small traders view Amazon as a monopoly. They are worried about their livelihood. 

This leads to several complex questions - can India strike a balance between big-ticket investments and small businesses? if the answer is yes, then how can India achieve the balance?

While the digitisation of Indian businesses is a welcome step, the question is  - what is Amazon's profit in this?

Already, India's small retailers blame Amazon and Walmart for offering deep discounts. For consumers, deep discounts are good news, but it sounds a death-knell for small businesses who struggle to compete with 'giant' discounts.

Unless the government brings in pricing regulations on online retail business, this problem will continue, with or without Amazon.

Amazon and Walmart have already been accused of violating India foreign investment rules. There are also doubts over how firms like Amazon use consumer data.

The government must make it clear to Amazon that predatory pricing practices will not be allowed in India. Having said that, it's a good thing that Amazon is interested in India.

It shows that there is global optimism on India's consumption and economy and more investments would only accelerate the economic revival.

India is home to the world's fastest-growing e-commerce market, second-biggest smartphone user base. India's export market could also improve drastically with investments from platforms like Amazon. 

The need of the hour is the balance. Small businesses are crucial for the long-term health of the Indian economy. Moreover, small businesses will promote local innovation.

The government needs to approach this situation in a graded manner by setting pricing norms, incentivising small businesses while also enhancing the synergies through investments from Amazon.

While Jeff Bezos makes his sweet offers, it is important for the government to understand a simple fact - the mood among small retailers should not be allowed to turn sour and bitter.

(Disclaimer: WION Edit is the channel's take on the big events of the world)