Ban On Amazon, Flipkart Sought Amid Festive Sales

Bengaluru: As the annual mega sales events of top e-commerce firms start, the debate around violation of FDI norms by foreign players has surfaced again. Recently, traders’ body Confederation of All India Traders (CAIT) and All India Mobile Retailers’ Association (AIMRA) released a white paper urging the Competition Commission of India (CCI) to suspend the operations of e-commerce giants like Amazon and Flipkart.

These traders’ bodies have alleged that foreign players are indulging in predatory pricing, and heavy discounting among others.

According to industry experts, the central government should enforce various norms with related to FDI in e-commerce. They cited the notification issued by the government in December 2019 for clarity.

“E-commerce entities would engage only in business-to-business (B2B) e-commerce and not in business to consumer (B2C) e-commerce,” the press notification has said.

“E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory-based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25 per cent of purchases of such vendor are from the marketplace entity or its group companies,” it added. Foreign e-commerce companies are not allowed to do inventory-based retail business in India.

Moreover, the norms specify that e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

Recently, AIMRA has alleged that Chinese-owned smartphone brands like OnePlus, iQoo, and Poco are engaging in anti-competitive practices by entering into exclusive deals with e-commerce platforms like Amazon.

The trade body alleged that such practices were supporting grey market activities, leading to tax evasion apart from undermining fair trade in India.

Meanwhile, the Competition Commission of India (CCI) has recently found out that companies such as Samsung, Xiaomi, Vivo, and Realme, along with e-commerce giants like Amazon and Flipkart, engaged in anti-competitive practices by favouring exclusive product launches online.

In an interview with Bizz Buzz, Secretary General of CAIT, Praveen Khandelwal has said that flouting of norms by the foreign players should be checked in an urgent basis.

“India’s Foreign Direct Investment (FDI) policy for e-commerce prohibits platforms from influencing prices and requires a level playing field for all sellers. Exclusive tie-ups lead to deep discounting and preferential treatment, which contravenes these rules by effectively allowing the platforms to influence the pricing and distribution of products,” he has said.

He has said that the practice of launching products exclusively on platforms like Amazon and Flipkart, coupled with heavy discounts and cashback offers through partnerships with banks, is leading to artificially lower prices, which traditional retailers cannot match. According to CAIT, lakhs of small retailers have closed shops owing to such unfair trade practices by big e-commerce players.

According to the notification issued by the government, e-commerce players are prohibited from influencing the selling price of good or services.

“E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner,” the notification has said.