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Amazon Negotiating For A Stock Purchase Of India's Reliance Retail: Reports

Amazon Negotiating For A Stock Purchase Of India's Reliance Retail: Reports
According to reports in the Indian media, negotiations to buy a stake in India's biggest brick-and-mortar retailer, Reliance Industries Limited, is being held by
Reliance's consumer and private labels business could be benefited because of the massive online presence of Amazon. But according to analysts, what is more important that the partnership will give Amazon better strength to rival Walmart which entered the Indian retailing market in a big way through an investment of $16 billion in India's Flipkart, India’s largest online retailer. This was part of Walmart’s strategy of gaining a bigger chunk of the fast growing online retailing market of India.
Rules for foreign direct investment (FDI) in e-commerce were modified by the Indian government in late December last year. Those changed regulations created additiotnal challenges to companies such as Amazon and Flipkart while benefiting local companies such as Reliance.
According to reports, while a proposal for partnership has been offered to Reliance by Amazon, the chance of a deal is not yet clear. Since last February, a proposal to purchase an up to 26 per cent stake in the Reliance unit has been considered by Amazon, claimed the reports.
"For Amazon, it is about neutralizing a major rival and allowing itself to grow," said a report quoting a source with knowledge of the matter. The report added that Amazon plans to help take online about 40 brands and grocery products of Reliance.
India's Economic Times newspaper first reported the news even though more details of a possible deal is not available yet. No official comments were available from Amazon and Reliance.  
The global experience in technology, supply chain and logistics of Amazon is likely to be leveraged by Reliance which would help in its strategy of digitally connecting through its Jio telecoms network, the grocery stores across India. The Jio telecoms network is by far the largest in the country in terms of subscribers.
The benefit of striking a partnership with Reliance for Amazon is the increased opportunity of the Seattle, United States based company to obtain access to the huge network of Jio telecoms and its platform as well as ion the very large retail footprint of the telecom company in India with more than 10,600 stores across the country. Analysts say that a partnership would also add to the lobbying power of Amazon in India because of the well connectedness of the Ambani family – the founder and owner of Reliance Industries.
According to the most recent market report by Deloitte, the Indian e=-commerce market is set to grow by three time to $84 billion between 2017 and 2021 and the American e-commerce company, the largest in the world, is looking to get a greater slice of the Indian online retailing market.
According to recent but previous reports, negotiations with China’s tech giant Alibaba were being held by Reliance for a possible sale of a share of its Reliance Retail. But according ot the reports quoting sources, differences in valuation of Reliance Retail wast he cause of a breakdown of the talks.

Christopher J. Mitchell

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