Amazon-Catamaran JV to help small businesses migrate to online platform

Global e-tailer Amazon, which has entered into a joint venture agreement with Catamaran Ventures, the private equity and venture capital initiative of Infosys founder NR Narayana Murthy, to bring small and medium businesses (SMBs) in India on the digital platform (See: Narayana Murthy's Catamaran plans India joint venture with Amazon).  

Catamaran will hold a majority stake in the JV, to be called Taurus Business and Trade Services. However, experts consider the move as part of Amazon's plan to launch a pure-play marketplace.

Catamaran confirmed the development, but did not explain details of the planned joint venture. ''Catamaran and Amazon Asia formalised a partnership in May to help offline sellers and SMBs in India take advantage of the potential of the fast-growing online customer base in the country.

"Catamaran is the majority shareholder in the entity," a spokesperson for the venture said.

While industry observers see this as a prelude to Amazon's plan to launch a pure-play marketplace in India with its own inventory soon after the government opens FDI in B2C e-commerce.

However, the BJP government, which put the proposals for FDI in the multi-brand retail sector on hold, is unlikely to consider the proposal to open up e-commerce.

The Modi-led government has decided not to act on the matter in a ''hurry''.

The government is faced with increased resistance from the trading community, the upcoming elections in three states, including Delhi, and a lack of clarity on the definition of e-commerce.

While the exact nature of the proposed joint venture is not known, it is expected to train small businesses to sell online and expand business. Amazon has an operational base in India and is accessible across the country.

"The entity is operational across major cities and towns in India to train SMB sellers in online tools and help them gain a larger customer audience for their existing merchandise and develop other offerings that will increase revenues and footfall for SMB retailers in India. The partnership will focus, accelerate and scale the inclusion of SMBs into the digital economy," the spokesperson added.

''Catamaran invests in ideas at various stages of evolution, including startups, mature companies and listed companies with varying degrees of ownership, from small minority to majority control,'' Arjun Narayanswamy who heads Catamaran, said confirming the development.

While the finance ministry has accepted the recommendations of the Mayaram Committee which backed increased foreign participation in Indian ventures, there is opposition within the BJP to allowing FDI in e-commerce.

Some consider allowing foreign e-commerce companies to operate here as backdoor entry for FDI in multi-brand retail. While there is no clarity on the shape of things to come, allowing e-commerce businesses is sure to open up the country's market to foreign goods and services.
 
Taking small businesses on board is key to the success of e-tailing. 

The earlier UPA government had allowed 51 per cent FDI in the multi-brand retail sector in September 2012, but the policy could not be implemented as the government's term came to an end.