Jeff Bezos must be welcomed with open arms

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BusinessLine

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Normally, a promise to invest $1 billion in India would have been greeted with minor rejoicing in New Delhi. But not in the case of Jeff Bezos, the owner of e-commerce giant Amazon and the richest man in the world.

Two well-placed individuals in the ruling establishment were less than enthusiastic in their response to the announcement, and in line with this, Bezos failed to get an audience with Prime Minister Narendra Modi.

The somewhat high profile Cabinet Minister Piyush Goyal said in so many words that this investment announcement was no big deal, as the money was coming in to foot the losses Amazon was making.

He thereafter seems to have had second thoughts, and said that the cash inflow was all right so long as it was in accordance with the rules.

Goyal, who held charge of the Union Finance Ministry when Arun Jaitley was ill, seemed to overlook some of the basic realities of business. Investment in a new venture covers not only the cost of acquiring assets but also meeting the cash losses that it makes till it breaks even on a cash basis. The importance of one is no less than the other. If investment in logistical hubs or plants and machinery leaves nothing to meet the cash deficit the business initially makes, then the business cannot survive.

Media-centric view

Goyal’s comment was followed by a party functionary, Vijay Chauthaiwale, who is in-charge of the BJP’s foreign affairs department, asking Bezos to take care of his employees back home before he could expect his charm offensive to work. Clearly resented was the critical stand taken by the prominent and respected US newspaper The Washington Post on some of the recent policy initiatives of the Modi administration.

The sentiment was: if you will be so critical of us on issues which matter to us, then you can go take your money elsewhere.

This misses out on several counts. Bezos cares more about making money in the long term than taking sides in politics. He is more agnostic in this regard than media mogul Rupert Murdoch, who is a Libertarian and was supportive of Margaret Thatcher. Murdoch’s media platforms mostly take a Right-wing line, like the Donald-Trump staple Fox News, or simply make money by titillating, eg British tabloid The Sun; even while he owns a title like The Times solely for the prestige of it.

The second point here is the kind of formidable institution the Post is in the world of journalism. It brought down the presidency of Richard Nixon through its Watergate revelations. Ben Bradlee, who led the Post through the Watergate reporting is a hallowed name in the history of American journalism.

If you ask today’s Post journalists to toe a particular line, they will simply walk out. What is more, US President Donald Trump is far more displeased with the Post’s coverage than Modi. But that has not made Bezos try and change the Post’s line. He would not succeed if he wanted to anyway, and it is likely that he does not.

The Post is a trophy that Bezos likes to own, and if the newspaper lost its editorial independence, it would not be worth owning. Under his leadership, not only was the Post’s marketing transformed, its editorial team has also been hugely revamped. While taking over the Post, Bezos was ready to foot its losses for a long time, but it has turned profitable in just a few years.

In the late 1960s, while in college, my fascination with journalism turned into the resolve to become a journalist in good part from seeing how the Post scripted American history and took it forward. It inspired politically-conscious young people then and still remains respected today.

Online retail conundrum

It is far easier to understand why the BJP should be wary of a giant online retailer which threatens the party’s big support base among shop-owners.

For all the convenience of online shopping, I do not want my corner of the world to be devoid of the local store. Invariably run by a genial proprietor who is on his feet for most of the day, such a shop is a part of the neighbourhood’s character. When I revisited my old Nizamuddin neighbourhood in Delhi after many years, I was sorry to find that Prem General Store was now unrecognisable, and Prem himself had departed this world.

The point is, we cannot fight technology, but we must use it to make our lives better. The local store is the human face of online retailing and it must be helped to remain financially viable by becoming e-enabled. A thriving local store sits, in a way, at the centre of its community. To have one you need the other.

There is also a systemic reason why Bezos and e-retailing are critical. They bring distribution into the digital era. To become a globally competitive economy, India needs to pursue excellence as much in distribution (taking the product from the factory gate to the consumer) as in manufacturing. ‘Make in India’ has a vision for only the latter.

In the 1980s, when the fear of Japanese manufacturing had pervaded the US, it would nevertheless point to one plus. Distribution in the US was far more efficient than in Japan. In the US, there were at most three layers between the factory gate and the consumer; in Japan there were half a dozen. Japan persisted with this so as to save jobs.

Today, the value added in distribution globally is far greater than in manufacturing. With the exception of food, it makes sense for India to design a lot of its products at home, courtesy its IT skills and start-ups, get them contract-manufactured outside and then sell them efficiently at home.

Some of the $1 billion will go into developing 100 digital haats in clusters like Tirupur and Meerut, to bring small and medium businesses into the digital economy. So the investment should be welcomed with open arms.

The writer is a senior journalist



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