CAIT to move court if online firms carry on discounts flouting FDI rules

E-commerce biggies continue sales, CAIT watches

Seventy per cent discount on home appliances, 50 per cent cashback on a new mobile phone, countless offers on fashion and home decor — nothing much seems to have changed two weeks after the new foreign direct investment (FDI) rules in e-commerce were enforced. 

Deep discounts continue on online marketplace giants Flipkart, its subsidiaries Jabong and Myntra as well as Amazon India. 

All these firms had said they restructured their business in India just to become compliant to the new rules, which categorically said that these platforms cannot influence pricing to increase sales. 

According to industry experts, in absence of penal provisions, online marketplaces are following their deep discounting strategy. Going ahead with its festive sales as per schedule, companies such as Flipkart, Jabong, and Myntra are having week-long Valentines’ Day sales, offering discounts of as much as 80 per cent. Amazon India is also offering discounts of almost 40 per cent.

“Prices for products on the Amazon.in marketplace are determined by the sellers. We work hard and continually innovate to offer services such as FBA (Fulfilment by Amazon) and Easy Ship to sellers on our platform. That enables them to significantly lower their cost of selling and reducing defects as they sell to a nationwide customer base. Sellers pass on these savings as lower prices on the marketplace.”

“The discounting never ceased. Online firms are still holding sales. We have to slash prices to compete with the bigger sellers. If the idea of the new rules in FDI in e-commerce was to finish predatory pricing, it has not worked at all,” said a seller on Flipkart as well as Amazon India on the condition of anonymity.

No powers to book, DPIIT awaits e-com policy

The Department for Promotion of Industry and Internal Trade (DPIIT) on its part has already set up a committee looking into various e-commerce portals to check for any violations of the rules. 

However, at the moment, the nodal agency does not have any penal powers to book e-commerce portals for violations. DPIIT hopes that the much-awaited e-commerce policy would solve this problem. “We have been monitoring these companies and have seen them flouting rules around predatory pricing. We believe that in the upcoming e-commerce policy we will have provisions to book and fine them for such violations,” said a senior official at DPIIT.  

However, online players maintain that they are not the ones fuelling discounts. “We are fully compliant with all Indian regulations governing e-commerce marketplaces, including product pricing and discounts. At Flipkart marketplace, pricing and discounting is decided by the sellers, with Flipkart serving as a platform for connecting lakhs of sellers and customers. We are committed to ensure that sellers on our platforms continue to access the consumers across the country efficiently and in a cost-effective way,” said a Flipkart group spokesperson.

Traders threaten taking e-com players to court

Trader organisations such as Confederation of All India Traders (CAIT) said they were tracking the sales on these platforms. "Despite having a policy in place, they are continuing with sales. We will wait for another week and then approach the commerce ministry, if that does not work then we would go to the courts,” said Praveen Khandelwal, secretary general, CAIT.