Amazon is hopeful that the Indian government would release a “stable predictable” e-commerce policy that would allow the retail behemoth keep investing and creating jobs in the country.
The commerce ministry is currently in the process of finalising the national e-commerce policy and multinational firms have raised concerns over certain provisions of the draft policy.
“Our engagement with the Indian government makes us optimistic about partnering and collaborating to seek a stable predicable policy that allow us to continue investing in our technology and infrastructure,” Brian Olsavsky, Senior Vice President and Chief Financial Officer (CFO) at Amazon.
The draft policy proposes to set up a legal and technological framework for restrictions on cross-border data flow and also laid out conditions for businesses regarding collection or processing of sensitive data locally and storing it abroad — which is a cause for concern among major players in the market.
The new Indian norms on foreign direct investment (FDI), which came into effect on February 1, prohibit e-tailers from selling products of companies in which they have stakes, despite both Amazon and Walmart seeking a six-month delay in their implementation.
As per the new norms, online marketplaces such as Flipkart and Amazon have been barred from selling products of companies where they hold stakes and the government has also banned exclusive marketing arrangements that could influence product prices.
These changes have a direct impact on, for instance, the US giant Walmart, which recently acquired a 77 per cent majority stake in the Indian e-retail major Flipkart.
Amazon has been forced to remove an array of products from its India website in order to comply with the new regulations.
Keeping this in mind, during an earning call with analysts after the company posted mixed results for the second quarter (Q2) 2019, Olsavsky said that a favourable e-commerce policy in India would “help us to create jobs and scale local businesses”.
Under its global selling programme, Amazon expects e-commerce exports from India to reach $5 billion by 2023.
“In India, we continue to see growth in programmes for both sellers — for our sellers and delivery partners. In the last 18 months, we’ve doubled the number of paid Prime member, which we’re very excited about.
“We’ve invested a lot in our global selling programme, which helps Indian sellers not only reach customers in India, but also in other geographies around the world,” Olsavsky noted as Amazon posted $63.4 billion in revenue with $2.6 billion in net income for the second quarter (Q2).
The Amazon executive said the company started “Amazon Flex” in India which helps its local partners to deliver packages, gives them jobs, grows the company’s delivery capacity for sellers and increases the speed of delivery.
“So it’s a win-win. We’ve also introduced package-free shipment programme in nine cities. This is going to be a big part of our shipment zero programme, a vision to make all Amazon shipment net carbon zero,” emphasised Olsavsky.
Amazon is looking at a good quarter during the Diwali holidays.
“The events we have for Diwali were all in Q4 last year, some of them are in Q3 this year based on the timing of the holiday. So, that’s factored into our revenue growth rate for the quarter,” Olsavsky said.