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Why is Amazon attacking India’s richest man? Deciphering a multibillion-dollar battle

Amazon's attack

 

Amazon and one of the world’s wealthiest men are locked in a multibillion-dollar, politically charged feud over Rani Pillai’s preferred grocery store.

Pillai, a 47-year-old retired nurse, frequents Big Bazaar, a low-rise supermarket underneath a metro station in a middle-class area in east Delhi. During India’s coronavirus quarantine last year, she attempted internet shopping. Big Bazaar, on the other hand, where jars of mango pickle compete for shelf space with spaghetti sauce, and family packs of instant noodles are stacked next to big sacks of basmati rice, was far superior.

“I want to see things first,” said Pillai, who had purchased a T-shirt and several packs of cookies on her shopping expedition that day. “I can see the things before I buy them here.”

Big Bazaar is owned by the Future Group, an Indian conglomerate with 1,500 supermarkets, snack stores, and apparel outlets in 400 Indian towns. Because of its physical presence, it is a prize for enterprises seeking a slice of India’s fast-growing technology and e-commerce sector.

 

Amazon is one of these businesses. It is placing a large bet on India, which currently accounts for almost a third of all e-commerce sales.

The American technology behemoth put down $200 million two years ago to obtain first dibs on the Future Group’s retail assets, and it engineered the deal to sidestep the Indian government’s tightening restrictions on foreign investment in Indian companies.

However, this put Amazon in direct competition with Reliance Industries, one of India’s largest and most powerful corporations. Mukesh Ambani, a businessman with interests in telecommunications, energy, and manufacturing, is the company’s owner. In August, Reliance dropped Amazon and agreed to pay $3.4 billion for the whole Future Group.

Two years ago, the American technology titan put down $200 million to have first dibs on the Future Group’s retail assets, and it arranged the deal to avoid the Indian government’s tightening prohibitions on foreign investment in Indian enterprises.

However, this pitted Amazon against Reliance Industries, one of India’s largest and most powerful companies. The corporation is owned by Mukesh Ambani, a billionaire with interests in telecommunications, energy, and manufacturing. Reliance left Amazon in August and agreed to buy the whole Future Group for $3.4 billion.

 

The victor of the Reliance-Amazon battle might have a huge impact in how India’s e-commerce industry grows. According to Arun Mohan Sukumar, an independent technology expert, e-commerce generates ecosystems for smaller firms focusing on payments, logistics, artificial intelligence, and machine learning. Government regulations may have an impact on the outcome.

“If the government chooses a winner in the e-commerce area, that winner will choose winners in several, so-called ‘sunrise’ sectors,” Sukumar explained.

 

Regardless of how the issue is decided, Ambani’s imprint can already be seen in the aisles of Big Bazaar, where Reliance Industries’ Good Life variety of beans, peas, and lentils has been given a premium.

“Over the last six months, we’ve begun carrying a lot more Reliance products,” said Ridh Nath, a Big Bazaar staffer who manages the foods area. While the Future Group battled with debt, Reliance shown a readiness to provide a credit line for its products.

Nath said that the Future Group’s contrasting headlines had originally concerned him.

 

“But the corporation advised us not to worry about the news, just focus on the customer,” he explained.

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