Why India Won't Tolerate Amazon

The business war of Reliance vs. Amazon demonstrates this

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India is E-commerce Paradise

India is home to an eCommerce market worth nearly $1 trillion, per the report, with retail sales expected to jump from $883 billion in 2020 to $1.3 trillion by 2024, according to Forrester Research data. Mom-and-pop shops comprise about three-fourths of India’s brick-and-mortar retail sector, the report noted.

Trouble in Paradise

Amazon’s two-year effort to halt a $3.4 billion deal between its estranged partner Future Group and Reliance Retail took a new turn on Tuesday as tens of millions of Indians woke up to find the U.S. e-commerce giant airing its grievances in several newspapers. This is not an approach that Indians will appreciate.

Reliance’s weird takeover of the retail stores of Future Group might just be the nail in the coffin for Amazon India. Even as?Walmart basically acquired Flipkart in May, 2018 India unlikely to make the same mistake again and its own monopolies will be seen as “better” than foreign outsiders and corporate invaders.

Reliance vs. Amazon Shows India’s Challenge

Reliance might not be an ideal leader, but at least it’s made in India.

In 2019, Amazon and Future, number two player in India behind market leader Reliance, became business partners when the U.S. company invested $200 million in a unit of the Indian group. A lot has changed since Amazon came to India thinking it could bulldoze its way to the top.

Amazon and Future group have been locked in a complex legal stand-off for more than a year now. This has stalled Future's Rs 24,500 crore sale of assets to rival Reliance Industries. But the law won’t always favor Amazon.

Reliance last month (February, 2022) began taking over several of Future stores after brokering deals with landowners in a move that?stunningly blindsided and outwitted the U.S. firm, which has invested over $6.5 billion in its India operations. Cash-strapped Future said in a filing earlier this month that it could not pay rent at many outlets.

How can Amazon realistically compete with the local brand? Reliance Industries , the country's biggest conglomerate. An Indian superpower in the making. In November, 2020 it became clear even BigTech was investing in India’s Reliance. Alphabet Inc's Google has paid ?33,737 crore to Reliance Industries Ltd's (RIL) digital subsidiary,?Jio Platforms Ltd, joining the list of global investors such as Facebook to have infused capital in the Mukesh Ambani-led company. With this transaction, Google now holds 7.73% stake in Jio Platforms. That’s $4.5 billion U.S. dollars. Google and Facebook wanted Reliance to win vs. Amazon, as Amazon is beating them in advertising growth in the 2020s at home.

India is booming, and Reliance is becoming something that nobody really anticipated. So how did this corporate war all begin?

In 2019, Amazon and Future, number two player in India behind market leader Reliance, became business partners when the U.S. company invested $200 million in a unit of the Indian group.

That deal, Amazon argues, came with non-compete clauses that prohibited Future from selling retail assets to certain rivals, including Reliance, run by one of India's richest men,?Mukesh Ambani. The deal also included clauses for settlement of any disputes under rules laid down by the Singapore International Arbitration Centre.

For all its glory, Amazon should not be let to have significant influence in India, after not being able to do business in China. Local brands and Titans in India should be allowed to fuel homegrown growth, not foreign companies, no matter where they come from. American corporate imperialism should not be allowed, especially in India that knows historically the struggles of having overlords, masters and foreign occupations.

Of course Future denies any wrongdoing, saying?Amazon is illegally seeking to exert control?on Future's retail business. Future Retail - the group's flagship retail arm - says it faces liquidation and its more than 27,000 employees can become jobless if the Reliance deal fails. Indian consumer need to choose companies that are born and made in India not foreign Titans with proven track-records of exploitation and strong-arm tactics.

As someone who lived in India, this is of course just my opinion. But I wonder how many Indians of the younger generation share my views on this.

If you enjoy articles about retail, business and tech you can read them on my Newsletter here. I cannot continue to write without community support. (follow the link below).

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