Amazon set for face-off with Ambani for India retail dominance

Mukesh Ambani’s Reliance Industries has agreed to buy Indian firm Future Group’s retail, wholesale, logistics and warehousing units for US$3.4 billion

Amazon, which owns a stake in a Future unit, has accused the supermarket chain operator of violating a contract between the two sides by agreeing to the Reliance deal

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An employee of Amazon India walks through a turnstile gate inside an Amazon Fulfilment Centre on the outskirts of Bangalore on September 18, 2018. Photo: Reuters

Published: 7:17pm, 26 Oct 2020Updated: 7:17pm, 26 Oct 2020

Amazon.com and Mukesh Ambani’s Reliance Industries’ fight for dominance of India’s lucrative e-commerce space is turning into a face-off, with both sides battling over the assets of a supermarket chain that could be key to their wider ambitions.

Ambani and Jeff Bezos, two of the world’s wealthiest men, want the stores and warehouses of Future Retail, which has penetrated Indian cities and small towns with sales of everything from grocery to fashion and electronics. Amazon, which owns a stake in a Future unit, and Reliance have in recent months made pacts with the Future Group, which they say are now being violated.

Reliance intends to purchase Future Retail’s assets “without any delay”, the conglomerate’s unit said in a statement late on Sunday, after a Singapore arbitration court restrained Future from going ahead with the transaction. Reliance had agreed to buy Future’s retail, wholesale, logistics and warehousing units for US$3.4 billion in August, pushing Amazon to request an emergency hearing to stall it.

In a separate statement on Monday, Future Retail said it was not party to the Singapore proceedings and the matter “will have to be tested” under Indian arbitration law.

Mukesh Ambani, chairman of Reliance Industries, is competing against Amazon founder and chief executive Jeff Bezos for the stores and warehouses of Future Retail, which has penetrated Indian cities and small towns with sales of everything from grocery to fashion and electronics. Photo: Agence France-Presse

“One can expect legal proceedings to be initiated in Indian courts from both” Future and Amazon, said Amit Jajoo, a partner at law firm IndusLaw. “If Future Group is stopped from going ahead with the sale, effectively it also stops Reliance.”

Amazon wants to block Reliance’s purchase of Future’s bricks-and-mortar assets because such a deal would give Ambani unparalleled dominance in the only billion-people economy open to foreign firms. Bezos has bet more than US$6 billion on India, and Future’s assets will allow it to reach small towns that house key consumers in a market estimated to swell to US$1 trillion.

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