Ecommerce giants like Amazon, Flipkart and Snapdeal have allegedly violated the Foreign Direct Investment (FDI) rules, according to the Confederation of All India Traders (CAIT.) The traders body has written to the Commerce Minister Suresh Prabhu claiming that the portals’ festive season sales influence prices by creating an uneven playing field.
According to CAIT, the companies were indulging in “blatant violation” of the FDI policy guidelines issued by the Department of Industrial Policy & Promotion (DIPP.) CAIT urged the government to take urgent action against these ecommerce firms claiming, “”Under FDI policy these companies cannot undertake retail trading activities but these e-commerce portals being habitual offenders of (the) government policies (and) are circumventing the law and (are) engaged in B2C (business-to-commerce) activities which is (sic) prohibited for e-commerce marketplace portals.“
The ecommerce firms launched their respective Diwali sales last week in anticipation of the festival, offering a multitude of discounts. But, under FDI guidelines, online retail companies which have opened their channels for foreign direct investment can involve only in business to business activities. Therefore, any company catering to business to customer activities will have violated a major FDI rule. All the ecommerce companies have invested in big advertisements across all mass media channels, thereby addressing the consumers directly, making these advertisements a direct contravention of the FDI guidelines.
Speaking about their complaint, CAIT Secretary General Praveen Khandelwal said, “They (ecommerce firms) 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.”
Amazon conducted their Great Indian Festival Sale from 21 September to 24 September 2017, along with Flipkart’s Big Billion Day Sale. At the same time, Snapdeal held their Unbox Diwali Sale from 20 September to 25 September. Meanwhile, Jabong, Myntra and Shopclues also conducted their respective sales between 20 September to 28 September this year. CAIT, reportedly, charged these ecommerce players for violating the FDI policy on 29 March 2016.
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