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US online retail giant Amazon has decided to put on hold its plans to open more warehouses in Karnataka.
Talking to BusinessLine during the opening of its B2B platform to merchants, Kaveesh Chawla, General Manager, Amazon Wholesale India, said the company has enough warehouse capacity and does not plan to open more warehouses in the State for the time being.
However, Chawla added that with “thousands” of merchants choosing to be a part of the Amazon Seller Services programme, the company intends to expand its supplier reach in other parts of Karnataka but did not get into specifics.
The Amazon Seller Services programme is open to merchants in Bengaluru and Mangaluru, company officials said. Interestingly, Amazon has set up its largest fulfilment centre in the country in Telangana, all of which is a part of the company’s $2 billion investment plans in India.
Tax issuesHowever, Amazon, which operates a 30,000 square feet warehouse, faces tax-related issues in Karnataka, which, industry watchers opine is one of the main reasons for the company hit the pause button on its investment plans.
Government authorities in the State alleged that Amazon India sold products directly to customers, thereby violating India’s FDI laws (which does not permit e-commerce companies to sell directly to customers but can do so only as a marketplace where other merchants can sell) and are also liable to pay VAT on online transactions.
The global retailer retorted that it is not doing business directly and asked the department to collect VAT from its sellers.
At that time, an Amazon spokesperson had said that currently all future investments in warehousing infrastructure for the e-commerce business in Karnataka are on hold. “We do look forward to a resolution at the earliest,” the spokesperson added.
Overall, Amazon has 10 fulfilment centres across nine States covering over one million sq.ft space, which still lags behind Flipkart which has 2.5 million sq.ft.
The Indian e-commerce space has been growing at a breakneck speed and is expected to reach ₹1,07,800 crore by the end of this year, according to analysts.
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