Amazon pays $1.2 bn legal fees in India to be operational
NEW DELHI: The US-based company Amazon Inc’s India operations has spent a staggering over $1.2 billion in legal expenses in the last two years to maintain its presence and relevance in one the largest markets globally.
As per the official data from the public account filings made by the company in India, all of Amazon’s India focused companies together have spent Rs 8,546 crore as legal fees in the financial years 2018-19 and 2019-20. This is almost a fifth or 20 per cent of its two-year revenue of Rs 42,085 crore.
“Despite India moving high on ease of doing business, it continues to be a highly regulated market and compliance to regulations has its own costs. But Amazon is not the only one having high legal expenses, it’s competitors Flipkart may be having similar level of expenses and so are several large corporations,” said an industry expert asking not to be named due to his association with e-commerce companies.
A legal expert also pointed out that most of the expenses shown as legal fees may not actually be going towards compliance and litigations but also towards facilitating operations in the country. An Amazon India spokesperson did not offer any comments on the issue. “We do not have any comments to offer on this as of now,” an email from the company said.
A recent report said Amazon has launched a probe after a whistle-blower raised a complaint of the company’s legal representative having a role in bribing Indian officials. While the company has not commented on this specific allegation, it has said that action is taken promptly for all improper actions. While the role of the legal representatives has been highlighted in the report, the focus has come back on vast expenses Amazon makes as legal fees. Amongst the highest legal fees reported are two entities of e-commerce player’s Indian companies Amazon India Ltd (holding company) and Amazon Seller Services Pvt Ltd the two together spent close to Rs 8,000 crore as legal fees in the past two financial years (FY19 and FY20).
The other entities of Amazon in India - Amazon Retail India, Amazon Transportation Services, Amazon Wholesale and Amazon Internet Services - also have high levels of legal charges commensurate with their size.