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E-commerce firms monopolising market by violating FDI policy: CAIT to PM Narendra Modi

CAIT in its letter to Prime Minister Narendra Modi said the absence of concrete action against big e-commerce companies like Amazon, Flipkart has led to a roadblock for small businesses to run their operations online

November 29, 2020 / 10:46 PM IST
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Big e-commerce companies having deep pockets are leaving no stone unturned in monopolizing the e-commerce business and retail trade of India with their malpractices and violating FDI policy, traders’ body Confederation of All India Traders (CAIT) said in a letter to Prime Minister Narendra Modi on November 29.

CAIT said the absence of concrete action against e-commerce companies has led to a roadblock for small businesses to run their operations online.

“It is most unfortunate that even being the custodian of the law, various government authorities have failed to protect the sanctity of the policy and law of the government,” it said in the letter.

In the past, CAIT has blamed the online marketplaces like Amazon and Flipkart for undertaking predatory pricing, deep discounting, loss funding, and exclusivity of various products, by violating the Foreign Direct Investment (FDI) policy.

However, both Amazon and Flipkart have repeatedly denied the allegations and claimed complete compliance with the FDI laws.

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“While urging for a strong action against them, it is requested that an e-commerce policy should be announced immediately with an explicit provision of an empowered Regulatory Authority to regulate and monitor the e-commerce business in India,” the letter added.

The trade body also sought the issuance of a fresh Press Note and removal of anomalies and disparities of Press Note No.2 of FDI policy.

Last week, CAIT’s National President B C Bhartia and Secretary General Praveen Khandelwal had said in a statement that no permission for FDI could have been granted for the inventory-based model of e-commerce being pursued by both (Amazon and Flipkart) of these companies by the way of indirectly controlling the inventories of most prominent sellers on their e-commerce marketplace platform, Financial Express has reported.

The body wrote to DPIIT Secretary Guruprasad Mohapatra claiming violation of the rules under the Foreign Exchange Management Act (FEMA), 1999.

Earlier it on November 4 also it sought action against Amazon for alleged violation of various sections of the act that helped it amass Rs 40,000 crore.

In a letter to Union Commerce and Industry Minister Piyush Goyal, the CAIT has sought an investigation against Amazon.com, Amazon Inc, Amazon.com NV Investments Holdings LLC and Amazon India Limited (collectively “Amazon”).

The CAIT alleged that Amazon is indirectly acquiring Future Retail Ltd.

“Over the past few months, our organisation has been examining various public documents pertaining to the investments by Amazon and it has come to light that Amazon has been conducting its activities in blatant violation of Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“FEMA Rules”), the CAIT letter alleged.
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