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Last Updated : Sep 15, 2019 10:55 AM IST | Source: Moneycontrol.com

CAIT seeks ban on Amazon, Flipkart's festive season sales

The two e-commerce giants hold annual festive season sales ahead of major festivals such as Dussehra and Diwali

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The Confederation of All India Traders (CAIT) on September 13 asked the government to ban upcoming festive sales on Amazon India and its rival Flipkart. The leading trader body said their deep discounts violate India’s foreign investment rules for online retail.

The two e-commerce giants hold annual festive season sales ahead of major festivals such as Dussehra and Diwali. These festivals are due in October this year. Indians make big ticket purchases such as cars and gold jewellery during these festivals.

Flipkart, which is owned by US retail giant Walmart, will host its six-day sale beginning September 29. Its competitor, Amazon India is yet to announce dates.

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Both e-retailers promise big discounts on everything from fashion to smartphones to home appliances and have previously said discounts and deals are offered by sellers on their platforms.

“By offering deep discounts ranging from 10 percent to 80 percent on their e-commerce portals, these companies are clearly influencing the prices and create an uneven level playing field which is in direct contravention of the policy,” the CAIT said in a letter to the union trade minister.

CAIT, which represents around 5 lakh merchants and traders across the country, also demanded a “blanket ban” on such sales and asked the government to probe the potential violation of Foreign Direct Investment (FDI) norms.

The trader body’s demands are unlikely to see government action before this year’s sales kick off. However, it could help frame government policy on deep discounts.

India does not allow FDI in inventory-driven models of e-commerce, used by Walmart and Amazon in the US, where goods and services are owned by an e-commerce firm that sells directly to retail customers.

It modified e-commerce rules late in 2018 to protect the country’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.

Those rules forced Amazon and Flipkart to reconfigure ownership structures and re-jig some key vendor relationships and agreements.

Asked for comment, Flipkart said over 1 lakh on its platform awaited its ‘Big Billion Days’ sale event.

“We empower our sellers with business insights that allow them to decide the best value for their own products, so they can deliver benefits and savings to consumers and scale their businesses at the same time,” said Rajneesh Kumar, chief corporate affairs officer at Flipkart Group.

Amazon said over 5 lakh sellers -- a bulk of which are small businesses, women entrepreneurs, startups, weavers and artisans -- use the festive sale to reach customers.

“Sellers decide the pricing for their products on our marketplace,” a spokeswoman for Amazon said. “They offer their choice of selection to their customers across the country at prices that they deem fit.”

In August, Amazon said at an open panel discussion, organized by India’s competition watchdog, that it abides by all Indian rules and does not influence pricing of products on its website.

(With inputs from Reuters)

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First Published on Sep 15, 2019 10:55 am
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