Jeff Bezos may have a laundry list of requests for Narendra Modi when he visits India next week

Jeff Bezos may have a laundry list of requests for Narendra Modi when he visits India next week
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  • Jeff Bezos is flying down to India to attend Amazon’s annual event for small and medium sized businesses.
  • The top boss at Amazon is also likely to meet Indian Prime Minister Narendra Modi during his India visit.
  • Regulatory uncertainties and trader grievances could figure in Bezos’ discussions with Modi.
Jeff Bezos is coming to India next week, and his potential meeting with Prime Minister Narendra Modi could be critical for Amazon’s fortunes in India.

Officially, the visit is timed with its annual SMBhav event, which is Amazon’s attempt at reaching out to the millions of small and medium businesses in the country.

At the same time, there are many regulatory uncertainties that haunt Bezos’ India unit.

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Jeff Bezos may have a laundry list of requests for Narendra Modi when he visits India next week

Sale of in-house brands

Indian government has tightened rules around foreign investment in multi-brand retail, placing restrictions on e-commerce players which operate on the inventory-based model. This forced Amazon to pull several product lines from its website from Amazon Basics, Solimo, Presto, and even Shoppers Stop.

However, domestic e-commerce players like Snapdeal and Paytm Mall can accept foreign investments since they operate on a marketplace model. Amazon and its multinational peers including Walmart-owned Flipkart believe that this is unfair.

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However, this has not deterred Amazon from finding loopholes in the system that it can work to its advantage.

To discount or not, is the question

The Indian government introduced draft policy Consumer Protection (e-commerce) Rules, 2019 that is aimed at protecting consumers against fraud and unfair trade practices.

However, this draft policy prohibits e-commerce players from influencing the price and offering deep discounts. Essentially, Amazon will not be able to attract buyers by offering deep discounts, which could have an effect on its revenue.
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The government hopes that this will create a level playing field for both Amazon on one hand, and smaller e-tailers as well as physical retailers on the other. However, this policy will offer more advantage to someone like Mukesh Ambani who has deep pockets as well as both online and offline retail business.

For Amazon and Jeff Bezos, this was an unexpected turn in legislation after years of investment in building a market for online retail.

As it stands right now, it looks unlikely that the government will yield to Bezos’ request on allowing deep discounts to gain more market share or yield on the issue of allowing Indian data to leave the country.
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Recently, Indian commerce minister Piyush Goyal had summoned both Amazon and Flipkart in a bid to thaw the standoff between the e-commerce giants and the traders’ body CAIT (Confederation of All India Traders). However, the meeting reportedly ended with Amazon and Flipkart executives being reprimanded by the minister.

The question of data localisation

Another facet of India’s National E-Commerce policy is data localisation. Something that’s also a part of the Personal Data Protection Bill currently being discussed by Parliamentary joint committee.

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The issue for Amazon is not the provision of servers since Amazon Web Services (AWS) already has data centres in Mumbai so data can be stored locally. However, if it needs to be sent to external servers for processing — Amazon will have to re-create those provisions within India.

What’s in it for Modi?

Given the fragility of India’s economy, and its need for fresh investments, combined with the stature of Bezos, Amazon may get an audience at the highest level even though the outcome of lobbying effort may be uncertain.

India matters for Amazon

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India remains one of the fastest growing markets for Amazon. The company has pumped in over $5 billion in its Indian arm since launching here.

Regulatory uncertainties could have a serious impact on the company’s revenues from India, which have the potential to touch $10 billion. For context, the Indian e-commerce market is predicted to touch $113 billion by 2025.

If Amazon can manage to persuade the Indian government to stabilize its ecommerce rules, Amazon India has the potential to become the largest overseas subsidiary by displacing countries like the UK, Germany and Japan.

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