It has been a year like never before and 2020 is now at its business end in the thick of the festive season. Taking full advantage of people’s need to put safety first by avoiding public places because of COVID-19, e-commerce platforms Amazon and Flipkart have launched bigger, longer annual sales to cash in.
This, however, has made Praveen Khandelwal, National Secretary General of the Confederation of All India Traders (CAIT), which has more than seven crore active members, see red. That army of members, he thundered, would wait a couple of months for the government to take action before taking to the streets to agitate against what he said were trading violations by the e-commerce platforms.
In a wide-ranging interview, Khandelwal asserted that Amazon and Flipkart are destroying Indian retailers through their deep discounting practices, and said this needs to stop. He also explained how Indian traders are doing their bit against China by shunning imports worth Rs 40,000 crore from that country, and shared his views on the Future Retail-Reliance Retail deal.
Here are excerpts from a conversation Khandelwal had with Tarun Sharma, which has been edited for clarity.
Q: Chinese imports are cheap whereas the government wants to follow a policy of ‘atmanirbhar’. How is CAIT supporting Indian companies in this matter?
A: We started a “Boycott China” campaign on June 10 and have received a tremendous response from Indian retailers as well as consumers. After the Galwan Valley confrontation, the people of India have also understood that buying Chinese products is indirectly supporting the Chinese army.
To support Indian manufactures, retailers stopped buying goods from the Chinese for the Rakhi festival. Every year rakhis worth more than Rs 5,000 crore are imported from China. Not a single rakhi has been imported from China in 2020. Similarly, for Ganesh Utsav, previously murtis worth Rs 500 crore would come from China, but not in 2020.
We have now made plans for Diwali with the help of the central government. We are buying products from local manufacturers and selling them to our 40,000 associations. And they are selling products at buying rates to their members. With this we are able to give a tough fight to Chinese products and support local manufacturers.
In this festive season alone, more than Rs 40,000 crore of imports have been cancelled or not ordered and we plan to strengthen local manufacturing units. For this we have been holding regular discussions with the government for assistance on the financial and technology front.
Q: Tell us about your e-commerce website.
A: We are developing our e-commerce site and it will be launched in the first week of December. The website has been named Bharat E-market and it is a purely ‘Bharatiya’ website, with no foreign investment.
Q: How will your website help you compete with e-commerce giants who burn cash to get business?
A: We have been creating this website with our association’s money. However, we will not have transaction charges, whereas Flipkart and Amazon have transaction charges of 5 to 35 percent. As per the government’s Foreign Direct Investment policy, Amazon and Flipkart cannot give deep discounts, and they have been violating this from a long time. If they publish the list of their top sellers, most will be their own companies. They are not here for nation building.
Why does Amazon have only 6 lakh vendors and Flipkart only 1.5 lakh vendors? Why are they not increasing the number of vendors in India? They are not working for India’s interest and are just increasing their valuation through a higher number of visitors. To increase the number of visitors they are giving deep discounts. The discount on Amazon or Flipkart is 70-80 percent compared with the local market. How is this possible without cash burn?
We are hoping all these malpractices will stop after the e-commerce policy comes out, which we are expecting soon. We have been asking the government to appoint a regulator for e-commerce to stop the wrongdoings by Amazon and Flipkart.
Q: Clearly, you believe Amazon is destroying the retail business in India. Why?
A: Yes, they are destroying the Indian retail business with their malpractices. We have informed the government and are waiting for action against Amazon and Flipkart. Otherwise, Indian retailers will shut their shops and start protesting on the streets, which the government cannot afford as Amazon and Flipkart deliver only to 200-250 cities, whereas the country has more than 3,000 cities. The government will not be able to handle the protest of 7 crore retailers across India. We will wait another couple of months for action and then start.
You have been complaining about malpractices by Amazon and Flipkart since 2018. In a recent affidavit in the Supreme Court and Karnataka High Court, the government said the Enforcement Directorate is investigating cases against both the e-commerce platforms…
We have approached the Karnataka High Court against Amazon and Flipkart for malpractices. The Competition Commission of India has also approached the Supreme Court against the Karnataka High Court ruling and the matter is pending. It is good that the Supreme Court has set a timeline of six weeks for an order.
On the Enforcement Directorate part, we are patiently watching the ED investigation. They are testing our patience also; when small traders make mistakes they eagerly take action but they are going slow in this investigation. Anyway, we are analysing every aspect and regularly interacting with the government and they are listening and acting on our demands.
Q: Future group is saying liquidation is the only option if its deal with Reliance Retail fails. What is your view?
A: If Future Retail goes for liquidation it will not impact the Indian retail business. Future retail was doing what a thousand retailers are doing across the country. But, if domestic companies are going for liquidation due to foreign companies then it is not good for the Indian economy. We should support Future Retail as an Indian company in its fight with foreign companies indulging in malpractices in India. This is just the starting point of liquidation. Many more Indian companies will go in for liquidation if we do not support them against foreign companies.