DIPP takes CAIT complaint against e-commerce firms to RBI, ED

CAIT alleged that e-commerce portals are circumventing the law and are engaging in B2C activities

The Department of Industrial Policy & Promotion (DIPP) under Union commerce & industry ministry has forwarded the complaint by Confederation of All India Traders (CAIT) against e-commerce players to the Reserve Bank of India (RBI) and the Enforcement Directorate (ED).

DIPP has requested both RBI and ED to examine CAIT's complaint and take necessary action, said a CAIT release.

In its complaint, CAIT alleged that e-commerce portals are circumventing the law and are engaging in Business to Consumers (B2C) activities, which is prohibited for e-commerce marketplace portals. These companies have solicited general public in to their respective sales by big advertisement campaign on print, electronic and social media.

"Since they (e-commerce companies) have received foreign investment, as such they are allowed to undertake B2B e-commerce activities and not Business to Consumer (B2C) activities. The advertisements addressed to the public in general tantamount to retail trading," the release by CAIT stated.

According to CAIT, these companies can only provide a technology platform for the sellers registered with them. Instead, the e-commerce firms were offering 'Sales' and 'discounts' on their online portals, thereby flouting the government's FDI (Foreign Direct Investment) policy.

CAIT said the e-commerce companies were offering jaw dropping discounts despite incurring heavy losses.

As per reports available in public domain, Flipkart registered a loss of about Rs 340 crore in 2012-13, which rose to Rs 719 crore in 2013-14 whereas Snapdeal posted losses to the tune of Rs120 crore in year 2012-13 which rose to Rs 270 crore in 2013-14.