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Amazon bets big on India with $250 milllion fund despite regulatory hurdles

Amazon India on Thursday announced a $250 million venture fund for small and medium businesses (SMBs) on the first day of its flagship event Smbhav. The Amazon Smbhav Fund will focus on helping digitise SMBs and drive technology innovations in the agriculture and healthcare sectors. Amazon’s incoming CEO Andy Jassy announced the new venture fund at the event and said, “Small and medium businesses are the engine and lifeblood of economies.”

The fund will primarily invest in Indian startups working on automating and digitising business operations. Amazon said another priority area is helping agri-tech companies build farm-to-fork models and reduce food waste, and assist the healthcare sector in adopting AI solutions and reducing administrative load. As part of the Venture Fund, the e-commerce giant has announced an investment in M1xchange, an invoice discounting marketplace for MSMEs.

Meanwhile, the company said it aims to onboard one million local sellers on its platform by 2025. Amazon is expanding its “Local Shops on Amazon” initiative launched in 2020 to meet this goal, even as local traders and retailers express anger at the company. Amazon currently has some 50,000 retailers onboarded on its platform from 450 cities.

Lastly, Amazon announced the ‘Spotlight North East’ initiative that aims to connect 50,000 weavers, artisans and other tribal communities to buyers. The company wants to sell handicraft items, teas, spices and other indigenous products from the North East to the rest of India and the world. The company is partnering with the Tribal Cooperative Marketing Development Federation of India (TRIFED) and North Eastern Handicrafts and Handlooms Development Corporation to achieve this.

The Smbhav event is a 4-day summit that markets itself as a platform to help MSME’s and Amazon sellers scale their businesses. Ironically, anti-Amazon trader groups representing Indian retailers held another event called “Asmbhav” in a protest.

A rocky path ahead? 

Amazon is betting big on India despite the regulatory challenges it is facing in the country, most likely because India could be a major market for the company’s future growth.

Earlier this year, a Reuters report revealed that two merchants, Cloudtail and Appario, accounted for over 35 per cent of total sales on the platform. Amazon has a stake in both the companies, cementing the notion that Amazon may have favoured specific sellers on its platform. He claimed that Amazon executive Jay Carney was given a list of things to say and not to say on his visit to India. The executive was cautioned not to divulge that 33 Amazon sellers accounted for a third of the value of goods sold on the platform.

In 2020, the Competition Commission of India (CCI) ordered an investigation into Amazon and Walmart-owned Flipkart after it received anti-competitive behaviour complaints. In August, a group of 2,000 online sellers filed an antitrust case against Amazon for allegedly favouring some retailer over others. Just yesterday, as Andy Jassy talked about empowering SMBs, Amazon told an Indian court that the Reuters report should not be considered as evidence. The CCI wants to lift an injunction on an anti-trust probe it had launched last year.

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