We have been bringing continuous updates to you on how India has been taking measures to safeguard their small scale local retailers from the allegedly ‘predatory behavior’ of the foreign-funded retail online joints, like Amazon and Walmart owned Flipkart.
The Commerce Minister Piyush Goyal had made it very clear that while he, along with the rule-making committee was prepared to listen to the queries companies had in the new FDI policies, he was committed to protect the small retailers.
Following the same scenario, we have a trending story for you today. It has been found out that these e-comm giants, especially Amazon and Flipkart have been enquired about their working techniques, along with a lot of other details.
Like always, the Confederation of All India Traders (CAIT) have again lodged a complaint against these giants, alleging them to have been violating the FDI policy in lieu of mega festive sales.
Flipkart & Amazon under
Questionnaire, Again!
Just like every time, the Department
for Promotion of Industry and Internal Trade (DPIIT) have this time
again conducted separate questionnaires with these e-comm companies
regarding their business models.
This time however, after heavy discounts provided by online retailers this festive season, several complaints were registered against them by the traders body CAIT, saying that these e-commerce companies have been violating the foreign direct investment policy.
This time the DPIIT has
asked Flipkart and Amazon to disclose names of top five sellers on their
platform, price list of goods of preferred vendors and the kind of support
provided to sellers. It has also asked them to share their capital
structure, business model and inventory management system.
This is obviously not the
first time that the CAIT body has been alleging these ecomm companies of
following unethical practices by indulging in predatory pricing. For the
same reason the DPIIT has held several meetings separately with these companies
and CAIT members.
The detailed questionnaire
that has been sent to these companies include queries about the:
- total number
of sellers listed on their platforms, - list and share
of controlled and uncontrolled sellers, - distributor
and retailer price list for preferred or controlled vendors and - proportion of
total sales from top five sellers.
The Current FDI Policy as
Elicited by Goyal
We had initially covered a string of stories informing you about the current FDI policies as directed by the Commerce Minister Piyush Goyal.
Just sometime back, in order to safeguard the small scale
local retailers from the allegedly ‘predatory behaviour’ of foreign-funded
retail online joints, like Amazon and Flipkart, Goyal along with executives of
different technological and online retailer companies, provided a detailed
discussion on all of his FDI policies, active since Feb 1, 2019.
According to this FDI policy, the government permits 100% FDI in the marketplace model of e-commerce but not in the inventory-based model. The online firms are also not allowed to influence directly or indirectly prices of goods to be sold on their platforms. The companies also strongly deny having indulged in deep discounting, saying brands offer those discounts.
After multiple complaints from local retailers and them going into heavy losses, the govt wants these giants to control their selling strategies, not disrupting local retailers from making profits. Amazon and Flipkart argued they provide logistics support and other services to small Indian retailers who use their e-commerce platforms to boost their businesses.
According to consulting
firm RedSeer, e-commerce companies such as Flipkart and Amazon could generate
up to USD 6 billion or Rs 39,000 crore in sales this festive season.
“Govt Investigates Amazon, Flipkart, Ordered To Disclose Top 5 Sellers: Deep Discounts Under Threat?”,
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