Amazon commits $250 million for India's small businesses as traders question practices

Sankalp Phartiyal and Aditya Kalra
·2 min read
FILE PHOTO: The logo of Amazon is pictured inside the company's office in Bengaluru

By Sankalp Phartiyal and Aditya Kalra

NEW DELHI (Reuters) - Amazon.com Inc on Thursday announced a $250 million venture fund for India, focused on bringing the country's small businesses online, as the company comes under fire from local retailers.

The new fund will focus on the digitisation of small and medium businesses, innovation in agri-tech and health tech, the company said.

"We are very passionate about trying to enable acceleration of small and medium-sized businesses, in fuelling innovation and the economy in India," the company's incoming CEO Andy Jassy said at Amazon India's event "Smbhav", which phonetically means "possible" in Hindi.

Jassy, who overseas Amazon's fast-growing cloud computing business, will take over as CEO from founder Jeff Bezos later this year.

Amazon also announced plans to bring 1 million shops onto its platform by 2025 under a "local shops" initiative that is aimed at bringing the stores online, and competes with the likes of India's Reliance's which also plans to use such retailers for online deliveries.

Many Indian retailers, which are a crucial part of Prime Minister Narendra Modi's support base, have long alleged that e-commerce giants like Amazon and Walmart's Flipkart flout federal regulations and that their business practices hurt small traders. The companies deny the allegations.

A Reuters special report published in February revealed the U.S. firm has for years given preferential treatment to a small group of sellers on its Indian platform, publicly misrepresented its ties with the sellers and used them to bypass the country's strict foreign investment rules. Amazon says it complies with all laws and "does not give preferential treatment" to sellers.

To read the special report click on http://reut.rs/2OCOT2W

As the Amazon's Smbhav "possible" event started, a group representing 600,000 Indian sellers held a rival summit of their own titled "Asmbhav", or "impossible", to protest against foreign e-commerce companies.

The traders' event featured video clips of several shopkeepers blaming companies such as Amazon and Filpkart for their struggles.

"Earlier every festival brought with it rapture and enthusiasm, now every festival brings despair," a smartphone seller from western India said at the event as he blamed foreign e-commerce firms for poor business levels.

Amazon is currently also facing regulatory scrutiny in India from the Competition Commission of India and the federal crime-fighting agency for possible law violations.

(Reporting by Sankalp Phartiyal and Aditya Kalra; editing by David Evans)