COMMENT:
Amazon founder Jeff Bezos arrived in New Delhi last week dressed to impress. He showed no hint of concern that India's antitrust watchdog had launched a probe into Amazon India and its rival Flipkart, owned by Walmart.
In a rust-coloured Nehru jacket and white kurta, Bezos visited the Mahatma Gandhi memorial, tweeting afterwards that he had "spent a beautiful afternoon paying my respects to someone who truly changed the world".
The next day, the tycoon — clad in a blue, sleeveless ikat jacket with a delicate traditional woven design — dropped in at a New Delhi stadium to address thousands of small and medium-sized Amazon sellers.
He unveiled plans to invest a further US$1 billion ($1.5b) into Amazon's local ecommerce business — taking its total commitment in India to US$6.5b. He also pledged Amazon would facilitate foreign sales of US$10b worth of "Make in India" products by 2025 — a nod to Prime Minister Narendra Modi's campaign to promote export-oriented manufacturing.
"I predict the 21st century is going to be the Indian century," Bezos gushed, to cheers and applause. "The dynamism, the energy . . . this country has something special."
But if he expected these verbal, sartorial and financial overtures to generate good vibes in New Delhi's corridors of power, he was mistaken. The stalwarts of Modi's Hindu nationalist Bharatiya Janata party government seemed unmoved.
Piyush Goyal, commerce minister, declared dismissively that Amazon was not "doing any great favour to India" by upping its investment. Instead, he speculated the US company needed fresh funds to finance its Indian losses due to "indulging in predatory pricing or some unfair trade practices".
The lambasting of one of India's biggest foreign direct investors — amid a severe economic slowdown — left many in the business community aghast, prompting Goyal to claim he had been misunderstood. But Modi declined to grant the tycoon an audience during his three-day visit.
Vijay Chauthaiwale, the head of the BJP's foreign affairs department, offered a clue to this frosty reception, with a not-so-oblique reference to critical media coverage of India in The Washington Post, which Bezos has owned since 2013. Responding to a video clip of Bezos enthusiastically forecasting the imminent "Indian century", Chautiawale tweeted, "please tell this to your employees in Washington DC. Otherwise your charm offensive is likely to be waste of time and money."
Whatever the real reasons, New Delhi's ice-cold shoulder towards a big investor made for poor optics at a time of plummeting growth. Ostensibly, Modi's government wants foreign companies to set up shop in India. It touts its improved ranking on the World Bank's ease of doing business index as a totem to assure prospective investors of a welcoming climate.
But the public relations blitz is undermined by numerous tales of woe from those who have taken the plunge. Cairn Energy, which invested US$6b in developing a large oilfield in Rajasthan, has been locked in a six-year battle over a US$1.6b retroactive tax demand levied after it sold a controlling stake in the business. Walmart paid US$17b for ecommerce platform Flipkart in 2018, only to have New Delhi change the sector's rules. Vodafone is threatening to shut down its mobile phone operations over a US$4b charge for retrospective fees, penalties and interest.
For decades, India's establishment has presumed global companies had no choice but to invest in the country, given its size. According to new data from the United Nations Conference on Trade and Development, India received US$49b in FDI inflows in 2019, an all-time high. That still pales in comparison with the US$140b that flowed into China last year, or even Brazil's US$75b.
In Dubai recently, I met a jet-setting businessman who advises funds on strategic emerging market investments. I asked whether he did much business in India. No, he said. He had never heard of any foreign investor making money there.
That is the perception (fair or otherwise) that New Delhi must overcome if it is to attract the job-generating FDI it so desperately needs. Showing more grace towards existing investors might be a start.
Written by: Amy Kazmin
© Financial Times