CAIT opposes retail trading by e-commerce firms

Traders' body files complaint with DIPP, says such a practice flouts govt's FDI policy

The Confederation of All India Traders (CAIT) has taken exception to the move by e-commerce players like Amazon, Flipkart and Snapdeal to host festive sales, citing that such a practice violates the FDI (Foreign Direct Investment) policy of the Government.

CAIT has filed a complaint with the Department of Industrial Policy & Promotion (DIPP) against these e-retailers. It said the FDI policy bars these online firms from undertaking retail trading activities. CAIT alleged that these e-commerce portals are circumventing the law and engaging in B2C (business to consumer) activities which is prohibited for e-commerce marketplace portals.

"These companies have solicited response from the general public in to their respective sales through big advertisement campaign on print, electronic & social media. Since they have received foreign investment, they are allowed to undertake B2B (business to business) e-commerce activities and not B2C. The advertisements addressed to the public in general tantamount to retail trading", said CAIT secretary general Praveen Khandelwal.

As per clause 6.2/16.2/1 of Consolidated FDI Policy Circular 2015, 100 per cent FDI is allowed in B2B e-commerce but not in retail trading.

CAIT feels the e-commerce firms need to be restricted from conducted such sales and necessary action needs to be initiated against them for flouting FDI policy norms.

Being online marketplaces, Amazon or Flipkart can only provide a technology platform for the sellers who are registered with them, pointed out the traders' body.

"Since the e-commerce players do not own inventory, they can not offer 'Sale' or 'Discounts' in totality on their online portals. But on the contrary, they are resorting to this practice which establishes that they are not only marketplaces but are openly flouting the FDI policy", Khandelwal said.

Amazon is holding the 'Great Indian Festive Sale' while Flipkart has announced its 'Big Billion Day Sale' from October 13 to 17. Snapdeal is holding its Electronics Monday sale today.