A confederation of merchants urged the government to introduce an entry tax for online goods

The small and medium merchants of IT hardware products in the State fear they might soon be shutting shop in pretty much the same manner as book stores did because of the thriving e-commerce trade fuelled by what they term “unethical pricing” offers.

At a press meet on Tuesday, representatives of the Confederation of I.T. Associations, a collective of over 1,500 vendors of computer hardware and gadgets, threatened to boycott the big vendors that allow the offers on e-commerce websites to thrive. They have also asked the State government to take note of how some e-commerce sites might be exploiting lower VAT prices in other States, making the point of sale happening in the State.

The confederation appealed to the Commissioner of Commercial Taxes to introduce an “entry tax” for online goods, to ensure a level playing field.

R. Muthiah Pillai, president of the Confederation, said they were not against the consumers getting the benefits of various offers. But he alleged that the e-commerce websites were indulging in unethical practices.

“And it is not just about the sale of the products. What happens to service,” he asked. “The small and medium vendors provide sales-cum-service on products. But if all of us have to shut shop across the state, just imagine what would happen to the consumers.”

The vendors said they would contest any excessive discount offered by e-commerce sites. “If the discount margin is five per cent or so, I can impress upon my customers to pay me extra because I am physically present to address any service request,” Mr.Muthiah clarified. “But sometimes the discount margins are huge, anything between 25 to even 50 per cent. This raises questions about the legitimacy of pricing offered by the stores. This scenario is not good,” he added.

Some of the e-commerce sites have been incurring losses but continue to offer discounts in the hope of raising further venture capital funds, or eventually building a business to sell off to big MNCs, the merchants pointed out.

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