Investors, trade bodies decry Piyush Goyal's statement on Amazon

Investors and multinational industry bodies expressed displeasure over Commerce and Industry Minister Piyush Goyal’s comments on Amazon, calling it the latest in a long string of episodes that showed the government placed undue importance on the views of domestic players, cutting out foreign voices in policy matters.

On Thursday, Goyal said Amazon was not doing any favours by deciding to invest an additional $1 billion into India, as had been announced by Amazon founder Jeff Bezos. Goyal had said the company was bringing in the additional funds to finance losses.

A day later, though Goyal said his statements had been taken out of context, foreign investors said the comments were part of a larger trend.

“It has become difficult for foreign investors to argue their case, as the government increasingly reduces the space for discussions on policies like e-commerce, foreign direct investment (FDI) rules and arbitration. Centre may have its concerns on certain issues, but we need freedom to make our own concerns known,” a senior functionary of a Washington DC-based bilateral trade body said. He added that the ministry had refused to meet the body over the past two months.

“The minister did not have to say what he said. The sentiment is certainly going to be anti investment now. Of course, being in India, one understands he is catering to his political constituency, but it does not send a good message to the investor community,” said a person who works closely with a technology industry association.

However, he added that Amazon could also have managed Bezos’ visit better. With rumours doing rounds that Amazon-owned Washington Post’s stand on India’s political climate irked the government, the tech giant could have ensured that the Post publish such perceived “anti India” pieces after Bezos’ visit, the person said. 

Case in point, it is learnt that the Prime Minister’s Office (PMO) has turned down repeated requests from Amazon to meet with the PM.

An executive with a large social media firm, who did not wish to be named, said Goyal’s comments do not augur well for investors and suggests that “being the Commerce Minister he doesn’t care about investments in the country”.

Another person, who works with a consultancy that works closely with several multinational firms across sectors, said the fact that the minister or any government representative did not have a discussion with Amazon at all was surprising, “especially at a time when market sentiment is not the best”.

“However, investors know the minister and it may not necessarily dampen interest in India. But, things could have been handled more diplomatically,” the person said.

Goyal's statements seem to have affected Amazon, as well. On Thursday, the Amazon India website featured a letter by Amazon CEO Jeff Bezos saying the company would create 1 million additional jobs in India by 2025. "More than 60,000 businesses are exporting 'Made in India' products globally, with cumulative exports crossing $ 1 Billion," Bezos said in the latter addressed to customers, sellers and partners. Amazon on Wednesday committed to exporting $ 10 billion worth of India-made goods by 2025. At the company event in New Delhi, Bezos announced $ 1 billion of additional investments to help small and medium businesses log in online.

Inbound foreign direct equity investments declined for the first time in six years in FY19, in line with overall weak economic conditions. Investments had reduced to $44.36 billion, down by 1 per cent from $44.85 billion last year. In the first full year (FY15) of the Narendra Modi government, annual inbound equity investments surged 22 per cent. The growth rate peaked at 35 per cent in FY16 and has fallen ever since.

However, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) earlier this month showed that growth in inbound foreign direct equity investments stood at 15 per cent in the April-September period of the current fiscal year (2019-20, or FY20).