Amazon may buy stake in Reliance
NEW DELHI: Amazon.com Inc is in talks with Reliance Industries’ retail unit to buy a stake in India’s biggest brick-and-mortar retailer, two sources with knowledge of the talks told Reuters.
Amazon’s massive online presence could help bolster Reliance’s consumer and private labels business. More importantly, a partnership would help the duo counter Walmart, which last year invested $16 billion in India’s Flipkart, in the batle for a bigger share of India’s fast-growing e-commerce market.
In late December, India modified rules around foreign direct investment (FDI) in e-commerce, creating additional hurdles for companies such as Amazon and Flipkart, and giving companies such as Reliance an edge.
Amazon had made the proposal to Reliance - controlled by Mukesh Ambani, India’s richest man - for the partnership, but it was not clear whether a deal would materialize, said one of the sources.
The second source said Amazon had been pondering a proposal to purchase an up to 26 per cent stake in the Reliance unit since at least February.
“For Amazon, it is about neutralising a major rival and allowing itself to grow,” said the second source, who added the company envisions helping Reliance’s roughly 40 brands and grocery products go online.
Reliance could potentially leverage Amazon’s global experience in technology, supply chain and logistics as it aims to connect grocery stores across the country digitally through its Jio telecoms network - the biggest in India by subscribers.
For Amazon, picking up a stake in a Reliance unit could mean geting access to the Jio telecoms platform and its vast retail footprint of more than 10,600 stores across India. It might also add more firepower to their lobbying efforts, as the Ambani family is viewed as being well-connected politically.