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Amazon, Flipkart violating FDI norms through festival sale: CAIT

CAIT represents 7 crore traders in the country through more than 40 thousand trade associations.

September 18, 2019 / 04:24 PM IST

The Confederation of All India Traders (CAIT) on September 17 said e-commerce companies such as Amazon and Flipkart are violating the foreign direct investment policy of the government by organising their six-day festival sale.

Both Amazon and Flipkart will be running their sale festival from September 29 to October 4.

However, unlike earlier, the e-commerce companies are not categorically talking about discounts during the sale period. Instead, they have been promoting easy financing options for customers available in partnerships with banks and NBFCs.

Press Note 2 bars marketplaces in India to directly or indirectly influence the price. Interestingly, they are not even talking about exclusive tie-ups, which have so far been the backbone of sales since the FDI policy has restricted them from forcing any seller or brand to have an exclusive set up with them.

"We have asked the government to put a ban on these festival sales because the festival sales are against the norms set out by the government under the FDI policy," Praveen Khandelwal, Secretary General, CAIT, told Moneycontrol, claiming that the marketplaces are indulging in B2B businesses and are also influencing price of the products.

CAIT represents 7 crore traders in the country through more than 40 thousand trade associations.

It has also demanded that the marketplaces share the names of the first 10 sellers on their platform in the past five years out of the lakhs of sellers they claim to be on their platforms. CAIT claims that  same set of entities are selling almost 80% of the goods via these platforms while the rest of the sellers are mute spectators and do not find any opportunity of doing business on these platforms.

Further, it has also stated that not the sellers but the e-commerce companies decided the price of the products and the discounts are funded by their investors.

Amazon claimed that around 5 lakh sellers will participate in this year's festive sale.

"We are a fully compliant organisation and take pride in creating enormous value to India in terms of boosting economic activity, supporting local manufacturing, Indian handicrafts and creating lakhs of new jobs directly and indirectly in line with the vision of Hon’ble PM Modi and supporting Make in India by bringing sellers to the market," said Rajneesh Kumar, Senior Vice President and Chief Corporate Affairs Officer of the Flipkart Group.
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Moneycontrol News
first published: Sep 17, 2019 05:22 pm