The business world is watching with curiosity as the super-rich in India and the super-rich in the world go head-to-head in business. Who will win the legal battle between Mukesh Ambani, the ruler of Reliance Empire and Jeff Bezos, the ruler of Amazon?
Is this really a ‘Foreign v/s Desi’ fight? It is an indisputable fact that the struggle is for the number one position in the Indian consumer market. The two powers are in a tug-of-war to conquer India’s ever-growing retail market. In August, Reliance signed a $ 3.4 billion deal to acquire the debt-ridden Future Group’s retail business. Bezos’ Amazon is trying to block the deal. Amazon has obtained an interim stay from the Singapore Arbitrator for breach of contract. Bezos now owns 49% of Future Coupons Ltd, the promoter of Future Retail Ltd. According to FDI rules, Future Coupons is controlled by Kishore Biyani, who owns 51% of the company. Future Group says the Singapore court ruling has no legal basis in India and will not affect its agreement with Reliance.
Amazon points out that Future Coupons Ltd will not be able to transfer assets or business to any third party without the consent of Future Coupons Ltd, and that the Board may not even consider such a proposal. Bezos Future Coupons were actually a way to get into Future Retail. Amazon is currently unable to enter the Multi Brand Retail Trade directly under FDI in India. The fact is that Amazon only allows e-commerce retail. Amazon cannot invest in Future Retail under FDI policy. So Amazon’s moves should be seen as a way to overcome the legal hurdles in the Multi Brand Retail Trade. Amazon had written to SEBI asking it not to approve the Reliance-Future deal.
At the same time, observers do not rule out the possibility of a joint venture with Amazon Reliance. At one point, it was reported that the two billionaires were working together. In September, Bloomberg News reported that Ambani had given Amazon an option to buy a 40% stake in Reliance Retail Ventures Ltd. Reliance, which has teamed up with Facebook and Google’s Alphabet Inc on a digital platform, is no surprise to be joined by Amazon in retail. But business observers suspect that the current legal battle is an attempt to make the Reliance stock offer more favorable. It remains to be seen whether Amazon is expecting a better offer from Reliance, which has teamed up with giants like KKR and Silver Lake.
