The Confederation of All India Traders (CAIT) has sought a stay on business operations of e-commerce giants, including Amazon and Flipkart, alleging violation of FDI policy.
The industry body, in a letter to Commerce Minister Suresh Prabhu, said while these firms were marketplaces, they were conducting business like a seller company, placing “big advertisements in the media, declaring discounts and announcing various other incentives for soliciting the customers for the inventory of which they are not the owners.”
This, it said, was a “blatant” violation of FDI policy by Amazon, Flipkart, Snapdeal, Jabong, Myntra and Shopclues.
These companies, CAIT demanded, should be “penalised… and immediate directions may be passed to stay operations of their respective technology platform” As per FDI policy guidelines, CAIT pointed out, e-commerce portals receiving FDI can conduct business for B2B segment and not for B2C segment. “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,” it said.
Influencing sale price
The policy states that “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.”
CAIT national president B. C. Bhartia said, “By inserting big advertisements in the media, they are attempting to address consumers directly which is contravention of the aforesaid guidelines.”
“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,” he added.
