Published On : Thu, Aug 11th, 2016

CAIT files complaint against e-commerce companies for flouting FDI policy

CAIT demands restrictions on conducting sales and stay of portal operations

: The Confederation of All India Traders (CAIT) has charged Amazon, Flipkart and Snapdeal for violation of FDI policy for e commerce of the Government issued on March 29, 2016 by Department of Industrial Promotion and Policy, Ministry of Commerce and has filed a complaint with DIPP today calling for action against these Companies for blatant violation of FDI policy. Under FDI policy these Companies can not 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 CAIT.

In a complaint sent today to Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce, the CAIT has demanded that not only these Companies be restricted to conduct such Sales but calling for stay for operation of their respective portals, it has also demanded that necessary immediate action should be taken against them for violation of FDI policy. The CAIT said that as per FDI policy guidelines issued on 29.3.2016, e commerce portals receiving FDI can conduct business activities for B2B business and will not be allowed to B2C business and as such the Advertisements issued by them in past days amounts to soliciting retail customers at their portals and influencing the prices and creating an uneven level playing field. Whereas as per Clause 2.3(ix) of the policy E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field. As per clause 2.3 (ii) Marketplace e-commerce entity is permitted to enter into transactions with sellers registered on its platform on B2B basis.

CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said these e-commerce portals are circumventing the law and engaged in Business to Consumers (B2C) activities which are prohibited 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. It is further submitted that it is also an attempt to influence the sale price directly or indirectly and create an uneven level playing field. They 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.

They further said that these Companies have solicits general public in to their respective Sales by big advertisement campaign on print, electronic and social media. Since they have received Foreign investment as such they are allowed to undertake B2B e commerce activities and not Business to Consumers (B2C). The said advertisements addressed to the public in general tantamount to retail trading. These Companies claim to be a marketplace and therefore can provide only a technology platform for the sellers who are registered with them. Since ownership of inventory does not hold by the said Companies they cannot offer ‘Sale” or “Discounts” in totality on their online portals but they are doing so which also establishes that they are not marketplace and as such openly flouting FDI policy and guidelines thereof.