Infosys co-founder and chairman, Narayana Murthy, is in deep trouble after his ties with Cloudtail, the entity Amazon used to circumvent Indian e-commerce laws, surfaced in public. Murthy is the majority owner of Cloutail, a ‘preferred seller’ at Amazon India, which gets a large chunk of its orders. Given the fact that India allows FDI only in the marketplace e-commerce model, not in the inventory model, having a ‘preferred seller’ is illegal in the country.
Therefore, when the investigation against Amazon (being investigated by the Enforcement Directorate for violation of FDI laws and by the Competition Commission of India for illegal practices), gets concluded, Narayana Murthy might get in trouble. Confederation of All India Traders (CAIT), the largest traders association in India with a membership of more than 6 crores, has already demanded an investigation against Murthy.
In a letter written to Minister of Commerce and Industry, Piyush Goyal, the trader’s body asked for investigation against Murthy for helping Amazon to circumvent Indian e-commerce laws. “The policy of the government specifically provided that the marketplace (Amazon) should have no relation or control over the retailer (Cloudtail). However, on the contrary, these retail companies are fully controlled by Amazon and the marketplace is a myth created by Amazon,” said CAIT in the letter to the minister.
“All orders go to Amazon which decides to which seller, the order is forwarded for delivery and naturally being the joint venture of Amazon, it always gives preference to the sellers who are either in indirect or direct control of Amazon,” it added.
In the letter to the Minister of Commerce and Industry, the body named Murthy and said, “We have reason to believe that Mr. Narayana Murthy, being one of the top corporate of the country is fully conversant with the operations of Cloudtail, much against the provisions of Press Note No.2 of the FDI policy and yet there is no dissent from Mr. Narayan Murthy. It amply ratifies the collusion between Mr. Narayan Murthy and Amazon for continuing its malpractices and unethical business operations in India. It is to be noteworthy that Mr. Narayana Murthy owns 76% in Prione. Prione owns 100% of Cloudtail yet the board of directors have Amazon in majority but the company is controlled, managed and operated by persons who were formerly employed with Amazon.”
Narayana Murthy, an adherent of Nehruvian socialism, has moved to ‘compassionate capitalism’ over the years. Although he never stopped pretending that he and his company cares a lot about the poor of the country, but when it came to profits, he chose Amazon’s big capital over the interest of more than 6 crore traders of the country.
Born a year before independence, he grew up in an intellectual sphere that was dominated by Nehruvian Socialism. His father, a high school teacher who retired as District Education Officer was staunchly Nehruvian and leftist. The town of Mysore in the 50s and 60s was a place where Nehru, the USSR, and anti-Americanism were middle ideals like any other part of the country.
Murthy has repeatedly claimed that money is not important to me. “I gave Nandan, Kris, and Raghavan a 15 per cent stake each in Infosys, though they had only two years of experience then and were some eight levels below me. I gave Shibu, Dinesh, and Ashok another 10 percent each. Money has never been important to me” he said in an interview.
However, given his ownership of Cloudtail which hurts the livelihood of more than 6 crore families of the country, one can see the contradictions between his statements and business practices.