The Indian ecommerce industry is in some serious soup. India’s traders body, the Confederation of All India Traders (CAIT) has decided to call out the ecommerce industry for the rules that its players are flouting in the disguise of sales and has urged the government to look into the matter.
CAIT has reportedly written to Union Commerce Minister Suresh Prabhu urging the minister to take serious action against ecommerce biggies like Amazon, Flipkart and Snapdeal etc. for disregarding FDI (foreign direct investment) norms listed for such players by engaging in retail trading activities. In the official complaint, CAIT has claimed that the ecommerce companies are indulging in a “blatant violation” of the FDI (foreign direct investment) policy.
CAIT alleges that Amazon’s Great Indian Festival Sale from 21 September to 24 September, 2017, Flipkart’s Big Billion Day Sale from 20-24 September 2017, Snapdeal’s Unbox Diwali Sale from 20 to 25 September 2017, Jabong’s Sale from 20 to 24 September 2017, Myntra’s Sale from 20 to 24 September 2017, and Shopclues’ Maha Bharat Diwali Sale from 20 to 28 September 2017 are all in violation of the guidelines issued by the DIPP.
In its complaint, the traders body divulges that the advertisements being carried out by these ecommerce companies for the last couple of weeks is an attempt of soliciting retail customers to their ecommerce platforms by influencing prices and creating an uneven level playing field in the industry.
Under the country’s FDI policy, ecommerce companies aren’t legally allowed to carry out retail trading activities, but ecommerce portals like Amazon, Flipkart, Snapdeal etc. have become such habitual offenders of the government policies that they’re circumventing the law by engaging in B2C (business-to- commerce) activities which is prohibited for ecommerce marketplace portals.
FDI policy guidelines dictate that ecommerce portals which have opened their channels for FDI can only indulge in business activities for B2B (business-to-business) business, meaning they have to stay away from undertaking any B2C (business- to-consumer) business activities. However, majority of the ecommerce players of the country have failed to adhere to this rule.
According to allegation levied by CAIT Secretary General Praveen Khandelwal, by inserting big advertisements in the mass media, these companies are addressing the consumers directly, something which is in strong contravention of the FDI guidelines.
He said, “They (e-commerce firms named) do not have ownership of the inventory of the products purported to be sold on their technology platform, how can they offer discounts or discounted prices on the products for which they are not the owners-questioned trade leaders.”
The latest development in the case is, that CAIT has charged Indian ecommerce players like Amazon, Flipkart and Snapdeal etc for violation of FDI policy for e-commerce of the Government issued on 29 March, 2016 by Department of Industrial Promotion & Policy, Ministry of Commerce.
Keep watching this space to know what action the government decided to take on the matter.
This development was first reported in India Today.