Amazon.com and Mukesh Ambani’s Reliance Industries’s 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 Ltd, which has penetrated Indian cities and small towns with sales of everything from grocery to fashion and electronics. Amazon, which owns 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, 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 $3.4 billion in August, pushing Amazon to request an emergency hearing to stall it.
In a statement, Future Retail said it wasn’t party to the Singapore proceedings and the matter “will have to be tested” under Indian arbitration law.
“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 brick-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 $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 $1 trillion.
Representatives for Amazon declined to comment beyond its statement, which welcomed the Singapore order.
Amazon drew the battle lines earlier this month when it accused Future of violating a contract between the two sides by agreeing to a buyout by Reliance. The deal would have been a bailout for Future, which faces another potential cash crunch as competition in the Indian retail space intensifies and the economy slows amid the pandemic.