US e-commerce giant Amazon has this year scaled down its investment in India, and this has evoked a wider debate over India as an investment destination with top politicians of both the countries joining in.

This financial year Amazon has so far invested only 28 billion rupees (US$ 394 million) in its India marketplace unit – Amazon Seller Services – while last year it had received 94.50 billion ($ 1.3 billion), Economic Times reports quoting regulatory filings.

If it does not make any substantial investment in the last quarter of this calendar year, this will the first time that Amazon’s investment in its India marketplace has come down since it set shop in the country in 2012.

Amazon has consistently grown its investment in its India marketplace, starting with 460 million rupees ($ 6.48 million) in 2011 to 62 billion rupees ($ 870 million) in 2017, and touching $ 1.3 billion last year.

Meanwhile, the Seattle-based online retailer has been picking up stakes in some of the large offline retailers in India. It has so far picked up a stake in fashion retailer Shopper’s Stop, grocery chain More and in August this year in Future Group, a Mumbai-based retail conglomerate.

Amazon acquired a 49% stake in Future Coupons, which holds about a 7.3% stake in Future Retail through convertible warrants. The transaction gives Amazon a call option to acquire all or part of the Future Retail stake that is held by Future Coupons.

This deal is expected to further intensify competition in the Indian retail sector, which now has three big groups fighting it out – Amazon and Future, Walmart-Flipkart and billionaire Mukesh Ambani’s Reliance Retail.

Analysts tracking the retail sector point out that Amazon’s investments shot up last year as it sought to build its grocery business and the supply chain around that, traditionally a cash guzzler. This year, with the infrastructure already in place, requirements for capital would have been lower.

In addition, after having invested in various offline retailers, the requirement to build a dedicated supply chain might have come down, they said.

Note, though, that on February 1 the Indian government revised e-commerce norms that had caused widespread disruption in the business of Amazon and Walmart-owned Flipkart as they had to alter their business structures and remove thousands of products from their sites.

The issue of Amazon’s cutback had an echo at the World Economic Forum’s India Economic Summit in New Delhi on Thursday. India’s Commerce Minister Piyush Goyal and US Commerce Secretary Wilbur Ross got into a debate.

The commerce minister noted that multinational e-commerce companies are welcome in India, but they can’t become platforms that engage in “predatory pricing” and use global capital to put small Indian retailers out of business.

Ross said, “Amazon is spending one-third of what it spent the year before in capex. It would probably have spent a lot more in India if it didn’t feel that there wasn’t a diminution in growth due to some of those [e-commerce] policies. There is also that cost to India by the policy.”

He pointed out e-commerce results in lower prices for all consumers. Keeping big e-commerce companies out and protecting small retailers was in effect slapping a penalty on all of India’s consumers, he added.

Goyal then said, “As far as Amazon’s investment is concerned, it could be several factors. They may have over-invested in previous years… I don’t know, I don’t run their business.” Taking a dig at the online giant’s discount strategy he said that maybe the company now recognizes that it can’t do “some of the things that they were possibly doing earlier.”

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