Amazon in Hot Water in India for Favouring Sellers, Bending Rules, Gov't Hands Investigation to ED

Last year, Amazon CEO Jeff Bezos announced a $1 bln investment to digitally empower small and medium businesses (SMBs) in India. Amazon's SMB Impact Report 2020 claimed that the platform works with over a million SMBs in India that include sellers, enterprises and delivery partners.

US-headquartered e-commerce giant Amazon has found itself roped in controversies in India after a Reuters report revealed that it had been favouring a handful of sellers and manipulating government guidelines between 2012-2019 to favour its platform in the country. 

The online shopping platform has been accused of giving preferential treatment to 33 Indian sellers – who collectively accounted for about one third of the total value of all the items that were sold via the company's website in early 2019. In addition, two bigger Indian merchants backed by Amazon’s indirect equity stakes had around 35 percent of the site’s sales business in their kitties in early 2019. 

So basically, a total of 35 Indian merchants had bagged two-thirds of Amazon’s online sales out of over 400,000 sellers that were using the platform for business at the time, the Reuters report claimed after having accessed the internal documents of the e-commerce platform.

Indian government officials familiar with the matter have told Indian media that they are aware of this development and are in talks with India's finance investigation agency Enforcement Directorate concerning the subject.

An investigation is likely to open against Amazon in India to probe if it maintained a stronghold over the inventory of some of its prime sellers in the country. In 2016, the Indian government had directed all e-commerce players to refrain from exercising control over their sellers’ inventories.

Amazon has denied the reported claims, saying that it abides by Indian law and that it ensures compliance with government policies at all times. In a written statement, the company has also said that it "does not give preferential treatment to any seller on its marketplace and treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory." 

Meanwhile, an Indian retailers' group called the Confederation of All India Traders (CAIT) has asked the government to ban foreign e-commerce platforms like Amazon from operating in the country.

“It is nothing less than a gang rape of the country’s laws and policies and that too when time and again, Indian Commerce Minister Piyush Goyal has warned e-commerce companies to invariably follow rules and policies more so in plain words. It is a matter of shame on Amazon that it was least bothered and kept indulging itself into continuing its sinister designs to manipulate and control not only e- commerce but even the retail trade,” Pravin Khandelwal, the chief of CAIT has said in a statement.

Khandelwal has previously also called out international e-commerce businesses for indulging in unethical trade practices, deep discounting, and predatory pricing which negatively affect SMBs in India.