Think tank writes to Piyush Goyal against “deep discounting” practices of Shopee, Meesho & Instamart

E-commerce giants, Niti Aayog objected to the draft rules released in June 2021 (Representative image)

A think tank that counts national co-convener of Swadeshi Jagaran Manch Ashwani Mahajan and chairman of the Fifteenth Finance Commission N.K. Singh as its board of governors has written to Piyush Goyal demanding an investigation into the business practices of internet companies like Shopee, Meesho, and Swiggy’s Instamart, alleging that they are quoting lower-than-normal prices.

“There is evidence of many of the foreign-funded e-commerce players like Meesho, Shopee and others indulging in deep discounting at their respective marketplaces and asking sellers to drop their product prices. This reflects not only influencing pricing but also funding discounts,” Council for International Economic Understanding (CIEU) said in a letter to the minister of consumer affairs.

It has also alleged that these companies are engaging in anti-consumer activities, without mentioning details.

“With these burgeoning consumer populations who do product purchases online, consumers must be presented with accurate and complete information when making buying decisions. These e-commerce platforms Meesho, Shopee, Swiggy Instamart, etc., need to strictly follow the Rules on Metrology so that the consumers are not duped or misled,” it said in its letter.

“We request that any kind of non-adherence has to be dealt with the harshest penalization to become an example for the future of these non-law-abiding companies,” the letter added.

Last month traders’ lobby Confederation of All India Traders (CAIT) had also written to finance minister Nirmala Sitharaman demanding action against Shopee, which is a Singapore-headquartered firm. CAIT alleged that Shopee is violating norms as it has entered India without seeking government approval despite having a Chinese investor. It also claimed that Shopee’s pricing strategy will undercut small sellers and retailers in the long run.

The Southeast Asian e-commerce firm, which entered the country a couple of months ago, has so far 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.

Meesho, on the other hand, got on the radar last month for announcing a price drop from its end to its sellers ahead of a sale. “Since Meesho is contributing to the price drop, we expect a similar price drop from your end too,” it told its sellers. Moneycontrol has a copy of the email.

Indian regulation bars e-commerce companies from offering discounts.

Shopee, Meesho and Swiggy did not respond to Moneycontrol’s query.
However, an industry expert on condition of anonymity said a 2 percent price drop was too insignificant to be brought into the category of “deep discounting,” referring to Meesho’s recent move.

Interestingly, Minister of Railways, Communications, Electronics and Information Technology Ashwini Vaishnaw and Minister of State for External Affairs Meenakshi Lekhi were the founding board members of CIEU, as per its website.

Current board of governors include names like TVS Capital Funds Gopal Srinivasan, Director, Reserve Bank of India, Satish Marathe, Member of Parliament, Rajya Sabha Sushil Kumar Modi, among others, as per CIEU's website.

Swadeshi Jagaran Manch is known to raise concerns of domestic traders against foreign-funded e-commerce companies in India. It has been in a constant battle with Amazon and Flipkart over alleged anti-competitive practices.

(The story has been updated as Meenakshi Lekhi and Ashwini Vaishnaw were the founding board members of CIEU till last year).