South East Asian e-commerce firm Shopee is violating norms as it has entered India without seeking a government approval despite having a Chinese investor, the Confederation of All India Traders (CAIT) told finance minister Nirmala Sitharaman in a letter demanding action against the company.
"The conduct of operations by an e-commerce entity, Shopee, is in breach of the Press Note 3 (2020). The Press Note amended the Foreign Direct Investment Policy and the Foreign Exchange Management Rules, 2019 mandating prior approval of the government of India in case, any investment is made in India by an entity of a country sharing land border with India or where the beneficial owner of an investment in India is situated in a land bordering country," Praveen Khandelwal, National Secretary General, CAIT.
Also Read: Shopee has onboarded 300 employees and 20,000 sellers in India
"Shopee is a Chinese e-commerce giant which has commenced its operations in India through an entity, SPPIN India Private Ltd, held by two holding companies SPPIN I Private Limited & SPPIN II Private Limited, both registered in Singapore. These two entities are in turn held by another parent company SPPIN Ltd, registered in the Cayman Islands. This complex structuring of entities is nothing but an attempt to hoodwink the Indian government and infuse Chinese funds into India," he added.
Making its first statement on Shopee in India, the Singapore government on December 15 said that the Southeast Asian e-commerce firm which entered the country a couple of months ago has already generated 300 jobs and enlisted 20,000 sellers.
In November, Moneycontrol was the first to report that Shopee had launched its operations in India and was clocking 1,00,000 orders on a daily basis.
It shows signs of emerging as a strong challenger that could potentially chip away at incumbents such as US-headquartered Amazon, Walmart-owned Flipkart and SoftBank-backed Meesho, apart from conglomerates such as Tata and Reliance, which also have huge ambitions for the consumer internet space in India.
The offline traders association also claimed that Shopee's pricing strategy will undercut small sellers and retailers in the long run.
"A bare perusal of the Shopee website and application will show that many products are sold on the platform at astonishingly low prices of Re 1, Rs 9 and Rs 49 etc. This low ball pricing by Shopee is being done with a calculated view to kill the offline players and micro and small-scale businesses and retailers in the country and amounts to predatory pricing and unfair trade practice," it added.
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