Industry body files complaint against e-commerce companies for flouting FDI rules


NEW DELHI: The Confederation of All India Traders (CAIT) has today filed complaint against online marketplace biggies Amazon, Flipkart and Snapdeal with Department of Industrial Policy & Promotions alleging FDI violations by the ecommerce companies.

“Under the FDI policy online marketplaces cannot undertake retail trading activities but these e- commerce portals being habitual offenders of government policies, are circumventing the law and engaged in B2C activities which is prohibited for e commerce marketplace portals,” said the industry body in a statement.

According to new FDI rules introduced in March this year, DIPP had classified the marketplace model as a B2B activity in which 100 per cent FDI was allowed. But this also meant that a marketplace could not directly or indirectly influence the sales price of goods or services or offer discounts and no vendor should account for more than a fourth of total sales.

Top e-commerce companies Amazon, Flipkart and Snapdeal have started the discount war again by introducing the Independence Day sales and advertising the event heavily in the print, television and online space. The companies claim to offer the biggest discounts to their customers during the sales event.

In a complaint sent today to DIPP, CAIT has demanded that not only these companies be restricted to conduct such sales events but the operation of their respective portals should also be stayed.

According to BC Bhartia, national president, CAIT and Praveen Khandelwal, secretary general, CAIT, these e- commerce portals are circumventing the law and engaged in business to consumers activities which is not allowed for e-commerce marketplace portals.

“By inserting big advertisements in the media, they are attempting to address consumers directly which is contravention of the aforesaid guidelines,” they said in a joint statement.

The statement said that these sales events conducted by the e-commerce companies is also an attempt to influence the sale price directly or indirectly and create an uneven level playing field.