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Last Updated : Jan 16, 2020 04:09 PM IST | Source: Moneycontrol.com

Jeff Bezos, Make in India and selling dreams to millions of Indian small businesses

More than 50,000 Indian SMBs exports Made-in-India products through Amazon’s Global Selling Programme.

Jeff Bezos can sell dreams even when Amazon's businesses are under the lens of different regulators in India.

On January 15, the Amazon founder said his company will try to export India-made goods worth $10 billion by 2025.

Amazon exported Made-in-India goods worth just $1 billion in the year to April 2019. It took Amazon four years to reach the $1 billion target after it started the so-called Global Selling Programme in India in May 2015.

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Earlier, Amit Agarwal, senior vice president and country head, Amazon India, had said in a statement that the American e-commerce player expected export of India-made goods to grow to $5 billion by 2023. Now, Bezos has made the target 10 times in five years. That's quite ambitious.

Well, it is not just a target. By announcing this, Bezos has just sold a billion dollar dream to millions of Indian small and medium businesses and budding entrepreneurs who can now look at selling their products across more than 180 countries where Amazon operates. Under its Global Selling Programme, Amazon already has 50,000 Indian exporters who list more than 140 million products that are Made-in-India on its platform.

There's more. About 5,800 Indian small and medium businesses export through Amazon’s International B2B programme that was started in 2018.

To reach the $10 billion mark in exports from India, Amazon will need more Indian exporters on its global selling programme, and definitely more products. That would essentially help existing small and medium enterprises grow faster, and create space for new entrepreneurs across India. According to Amazon's internal numbers on exports from India, a large chunk of exporters comes from small towns like Darjeeling, Ranchi and Sanganer.

Bezos also wants to pump in $1 billion in digitising Indian small and medium businesses, or bringing SMBs into the online commerce system. So, with its growth in India and globally, Amazon is creating opportunities for small and medium businesses in India.

That's the good news. But bear in mind that announcement also appears timed to soften the protests against Amazon's presence in India. Brick-and-mortar retailers have been repeatedly alleging that the American online retailer has hurt their business by its deep discounting practices. Their lobby, the Confederation of All India Traders (CAIT), has alleged that Amazon has flouted foreign direct investments (FDI) regulations by influencing the prices of products sold on its online marketplace.

Remember that the draft national e-commerce policy released in February 2019, which was followed by a few notifications, had barred e-commerce marketplaces from operating inventory-led models and prohibited them from selling products directly to consumers. Restrictions on the inventory-led model are designed to prevent e-commerce marketplace operators from influencing prices through heavy discounts.

These allegations led to India's antitrust watchdog the Competition Commission of India (CCI) intervening and conducting a study that outlined its plan to "bring out clear and transparent policies on discounts" for e-commerce companies operating in the country.

To be sure, the fact remains that e-commerce still accounts for just around 5 percent of total retail in India. So, the quantum of business lost for brick-and-mortar retail may not be too big as yet. At the same time, Amazon has created a new market for Indian small and medium retailers -- exports to more than 180 countries. Without Amazon, it well may have been difficult for small and medium companies across India to tap such a diverse variety of markets across 180 countries.

Whether Amazon has violated FDI (foreign direct investment) norms, or if deep discounts are really hurting Indian retailers with physical stores are questions that the regulators need to find answers for. Besides, discounts always benefit consumers.

That being said, helping SMBs and violation of laws, if any have occurred as alleged, should not be linked in any way. Remember that at the end of the day, as Made-in-India products are sold more through its platform, Amazon also gains through commissions and fees. It is a pure business decision and should be seen as such.

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First Published on Jan 16, 2020 01:19 pm
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