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Amazon India enters 11th year; here's a list of controversies it has faced

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Amazon, the global e-commerce giant, has completed 10 years in India. On Monday (June 5), to mark the event, the company launched various offers such as cashbacks on purchases. Over the decade, Amazon has made vast changes to the Indian retail segment, and also spurred several local competitors to take on the US behemoth.

However, it has not been all roses and sunshine for the firm. Amazon has faced a series of controversies and allegations of unfair trade practices in India. These issues have drawn attention to the company’s treatment of small and medium business owners, working conditions for employees, compliance with local regulations, product controversies, environmental impact, and the stance of advocacy groups such as the Swadeshi Jagaran Manch (SJM).

Let’s delve into some of these key concerns even as Amazon reaches its 11th year since it started operating in India, in June 2013:

Unfair trade practices and preferential treatment: Small and medium business owners have accused Amazon of favouring certain large sellers on its platform, engaging in predatory pricing, and unfair competition. In 2020, around 2,000 online sellers filed an antitrust case against Amazon in India, alleging preferential treatment of specific retailers. The allegations revolve around claims that Amazon influences product prices and engages in practices that harm smaller retailers.

Treatment of Workers: Amazon has faced criticism in India, as in other countries, for the working conditions in its warehouses and its treatment of delivery drivers. Concerns have been raised about long working hours, job insecurity, and inadequate compensation. These issues have prompted discussions about workers’ rights and the need for better labour practices.

Data Localisation: Amazon has been embroiled in debates over data localisation in India. The Centre has advocated for regulations that mandate companies to store Indian users’ data within the country, citing reasons related to national security and data privacy. These regulations have implications for companies like Amazon, which have vast amounts of user data stored on their servers.

Controversies over Products: Amazon has faced backlash over certain products sold on its platform. For instance, in 2020, a controversy erupted over doormats featuring images of Hindu deities sold by a third-party seller on Amazon’s website. This incident sparked calls for a boycott and raised questions about Amazon’s content monitoring and regulation practices.

Environmental Impact: Amazon’s environmental impact, particularly concerning packaging waste, has also come under scrutiny in India. The excessive use of packaging materials and the disposal of non-recyclable waste have been points of contention. Critics argue that Amazon should take greater responsibility for minimizing its ecological footprint and adopting sustainable practices.

Swadeshi Jagaran Manch (SJM) and Advocacy for Self-Reliance: The SJM, an affiliate of the Rashtriya Swayamsevak Sangh (RSS), advocates for national self-reliance or ‘Swadeshi’ in India. The SJM has been critical of foreign direct investment (FDI) and the operations of multinational corporations like Amazon in India. They believe that foreign companies should not have undue influence over the Indian market and that local businesses should be protected.

Compliance with FDI Laws: The SJM has accused Amazon of violating FDI norms that prohibit e-commerce platforms from selling products of companies in which they hold stakes. They claim that Amazon has indirectly influenced the prices of goods and engaged in predatory pricing, which is not permitted for e-commerce marketplaces according to Indian regulations. These allegations have raised concerns about fair competition and adherence to local laws.

Harming Small Traders: The SJM argues that Amazon’s business practices harm small traders and drive them out of business. They contend that Amazon’s preferential treatment of certain large sellers creates an unfair playing field, leading to negative impacts on smaller retailers. This has led to protests by small business owners in India, particularly during key Amazon sales events.

Investigations and Antitrust Complaints: As of 2021, the Competition Commission of India has been investigating concerns raised by vendors and small business owners regarding payment issues, logistics challenges, and the commission charged by Amazon. These investigations aim to address potential antitrust issues and ensure fair practices in the e-commerce sector.

The controversies surrounding Amazon in India reflect the complex challenges faced by the company as it operates in a rapidly evolving market with diverse stakeholders. As discussions and investigations continue, stakeholders are looking for solutions that strike a balance between promoting fair competition, protecting the interests of small businesses, ensuring workers’ rights, addressing environmental concerns, and maintaining data privacy and security.

Legal battle with Future Group: The ongoing dispute between Future Group and Amazon has created a complex legal battle with significant implications for the retail industry in India. Let’s examine the key events and arguments surrounding this controversy:

  1. In 2019, Amazon invested $200 million in a unit of Future Group, establishing a business partnership between the two entities.
  2. The agreement between Amazon and Future included non-compete clauses, which prevented Future from selling its retail assets to specific competitors, including Reliance.
  3. Disputes arising from this agreement were to be settled under the jurisdiction of the Singapore International Arbitration Centre.
  4. Faced with financial strain due to the pandemic in 2020, Future Group planned to sell its assets to Reliance.
  5. Amazon contested this sale through Singapore arbitrators, arguing that it violated the non-compete clauses and successfully blocked the transaction.
  6. Amazon claimed that the 2019 agreement granted them special rights over Future’s retail assets, some of which Amazon intended to acquire, subject to relaxed regulations for foreign investors in India. Future Group, on the other hand, denies any wrongdoing and accuses Amazon of attempting to exert illegal control over its retail operations.
  7. If the deal with Reliance fails, Future Retail, the primary retail subsidiary of Future Group, warns of potential liquidation, which could result in over 27,000 job losses.
  8. Future filed a complaint with India’s antitrust agency, accusing Amazon of making false and conflicting claims about the 2019 deal.
  9. In December 2021, the antitrust agency suspended Amazon’s approval of the 2019 deal, alleging that Amazon deliberately concealed the true scope and nature of the agreement.
  10. In January 2022, an Indian court further complicated the situation by halting the Singapore arbitration proceedings due to the antitrust agency’s decision.
  11. On February 25, 2022, Reliance, previously not publicly involved in the dispute, began a “de facto” takeover of approximately 500 Future stores by assuming leases held by the financially troubled Future due to missed rent payments.
  12. On March 3, 2022, Amazon called for an end to the ongoing legal battles and expressed willingness to engage in discussions. Future Group consented to participate in these discussions, which were ongoing at the time.

As the discussions between Amazon and Future Group continue, the outcome of this contentious dispute will have significant ramifications for the retail industry in India and may set precedents for future business agreements and partnerships.

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