CAIT to organise mass agitation to protest against anti-competitive practices of Amazon: Praveen Khandelwal

E-commerce as a category has spent Rs 813 crore in first half of 2020. One company from this category Amazon Online India took the fourth spot in the top 10 advertisers' list with ad spend in the range of Rs 250 to Rs 350 crore. (Image: Amazon)

Taking its fight against e-commerce majors Amazon and Flipkart to the next level, trader body Confederation of All India Traders (CAIT) on February 17 announced it will be launching a nationwide agitation from February 26 with sit-ins at up to 1,500 locations.

The Bharat Vyapar Bandh will build consensus among traders and the public, and inform them of the malpractices of e-commerce majors who routinely flout the existing rules in the sector, CAIT Secretary General Praveen Khandelwal said.

"We are launching a nationwide mass agitation against online platforms like Amazon and Flipkart who are cheating both small retailers and consumers in this country. It has been proven time and again that only a handful of companies control all the inventory on platforms like Amazon. Based on recent reports and our own investigation, only 35 companies are responsible for up to 85 per cent of all sales on Amazon platform," Khandelwal said. According to current rules, e-commerce platforms can't directly own inventory sold on their platform, nor can entities in which they have a financial stake be listed on the platform.

Talking to Moneycontrol, he also stressed that CAIT was evaluating all legal options to ensure taking action against the practices of the global giant and its domestic peers.

Trader lobby groups such as CAIT and RSS-affiliated Swadeshi Jagran Manch have repeatedly raised the issue and submitted evidence to the Department from Promotion of Industry and Internal Trade and the Competition Commission of India of rules being flouted. "We want to give an open challenge to Amazon to reveal who the largest sellers on their platform are over the last 4 years. This is a matter of predatory pricing, inventory control and deep discounting," he added. CAIT requested the government to immediately shutdown the Amazon platform and open a specific investigation against it. It may now also bring land a legal challenge against Amazon, Khandelwal stressed.

Currently, the Enforcement Directorate is investigating Amazon India for violating the Foreign Exchange Management Act (FEMA), a senior Commerce Department official clarified. The Commerce and Industry Ministry on Thursday stated that certain clarifications have been sought from e-commerce entities to ensure the sector works in the true spirit of the law.

"To reiterate, e-commerce is supposed to provide an agnostic platform so that buyers and sellers can trade with each other, the platform should not become part of the trading transaction, should neither be funding it, should neither be having algorithms which give preference to one or the other, should neither be promoting their own products but provide all data that is required for a rational choice, and the choice should be a free choice of the consumer," Commerce and Industry Minister Piyush Goyal said.

Fresh trouble brewed for global e-tailer Amazon following a report by an international news agency which alleged that 35 preferred vendors constituted over two-third of Amazon's online sales in India till 2019. The 35 sellers included two of the most prominent ones where Amazon had indirect stakes -- Cloudtail (in partnership with Narayana Murthy's Catamaran Ventures) and Appario.

As per Press Note 2, online retailers with foreign direct investment are barred from selling their own inventory on their websites.

In order to abide by the laws on papers, Amazon in February restructured its partnership with companies such as Catamaran Ventures through which it runs a venture called Cloudtail, one of its preferred vendors.

In February 2019, Catamaran Ventures raised its stake in Cloudtail's parent company Prione Business Services. The move reduced Amazon Asia's stake in Cloudtail to 24 percent from the earlier 49 percent, with Catamaran Ventures’ stake rising to 76 percent from 51 percent earlier.

Following this, Cloudtail ceased to be an Amazon group company, making it compliant with the rules on the papers but yet not serving the purpose with which the norms were straightened.