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    Opinion Economic Impact From Amazon to Asset Monetisation, Policy Contradictions are Inherent in the Hindu Nationalist Ecosystem of Modi Government

    From Amazon to Asset Monetisation, Policy Contradictions are Inherent in the Hindu Nationalist Ecosystem of Modi Government

    If Amazon, with barely 2% of the retail market, can be called “East India Company 2.0”, how would one describe inviting foreign capital to buy into hitherto government monopolies?
    This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.

    After accusing Infosys of working against Indian interests, the RSS-affiliated publication Panchjanya has described Amazon as “East India Company 2.0”, seeking a monopoly in Indian retail with “initiatives for seizing the economic, political and personal freedom of Indian citizens.” There are accusations that Amazon has spent $1.2 billion in legal fees or allegedly underhand payments to expand its Indian operations. The US authorities are ostensibly investigating.

    The Swadeshi Jagran Manch (SJM), affiliated to the RSS, has also argued that e-commerce giants like Amazon will hurt small traders and kirana stores in India. But the Reliance group and the Tatas are also in the same space (Jio Mart and Big Basket). The Tatas are tying up with Walmart to build a bigger e-commerce platform in India. If Amazon harms small kirana stores, so will Jio Mart, Big Basket and the Tata-Walmart joint venture. By exclusively objecting to Amazon, Sangh parivar affiliates like Panchjanya and SJM may be indirectly aiding the e-commerce projects of domestic business monopolies. This would not necessarily save the small kirana stores the Sangh Parivar claims to be protecting.

    Policy contradictions are inherent in the Sangh ecosystem’s articulation of the issue. Some of them may not stand the test of WTO rules on trade and investment reciprocity in services. They may even fall foul of the emerging Indo-US bilateral economic partnership, a counter to China, whose e-commerce investments are being shunned by India.

    The Modi government has officially allowed Amazon, Jio Mart and the Tatas to work within a regulatory system which is evolving rapidly in response to massive growth in the sector, accelerated by the pandemic. A new normal is being reached in e-commerce as fresh regulations are brought for orderly growth.

    Also read: Amazon Opens Investigation into Alleged Bribes Paid by its Legal Counsel to Indian Govt Officials

    The Indian retail market is worth $800 billion and e-commerce has barely 5%-6% of it. So roughly, about $40-50 billion in annual sales happen via e-commerce platforms like Flipkart, Amazon, Jio Mart, Big Basket and smaller players. E-commerce may treble by 2025, helped by the big push to the digital business ecosystem. The political economy outcome: small grocers and kirana stores will be affected, and forced to reinvent themselves. This has happened in other societies where e-commerce and big format physical stores like Walmart have become dominant. There is no escaping the effects of policy choices for promoting e-commerce in general. Sangh Parivar outfits railing against a single entity like Amazon are hypocritical and diverting attention from the real issues.

    If Amazon, with barely 2% of the retail market, can be called “East India Company 2.0”, how would one describe the Union government, which is inviting foreign capital to buy into hitherto government monopolies like General Insurance Corporation and Life Insurance Corporation, besides promoting wholesale privatisation in strategic sectors like energy and railways? This is really rolling out the red carpet for “East India Company 2.0”!

    However, the RSS and its affiliates have observed radio silence on big divestments in insurance, which was always strictly a no-go sector for the RSS. It was an article of faith that foreign insurance companies must not have unbridled access to Indian savings. BJP backbenchers defied their own leader in Parliament, Jaswant Singh, to vote against a minor increase in the foreign investment limit in insurance under UPA1. Singh had assured then finance minister P Chidambaram of support in amending the law.

    But the bill enabling divestment of insurance companies was pushed through by the BJP without any discussion! Sangh parivar outfits must realise that the rhetoric of “East India Company 2.0” has zero credibility, given that the Modi government has put up most strategic government assets for sale. Running with the hare and hunting with the hounds has its limits.

    Read the Opinion at The Wire.in

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