CAIT seeks luxury tax on quick commerce, roll-out of e-commerce rules

Proposal to be part of recommendations to govt; move aimed at protecting kirana retailers

The Confederation of All India Traders (CAIT) has proposed a luxury tax on purchases made through quick commerce platforms on the grounds that the convenience of rapid delivery offered by such platforms qualifies as a luxury and should be taxed accordingly. The proposal will be one of the recommendations and set of demands the trade body plans to submit to the Ministry of Commerce and the Ministry of Consumer Affairs.

 

This move is intended to draw attention to the impact of quick commerce and alleged violations of foreign direct investment (FDI) and e-commerce regulations by online platforms that pose a threat to kirana retailers.

 

The trade body also demanded the immediate enforcement of FDI and e-commerce policies and the roll-out of e-commerce rules under the Consumer Protection Act, along with mandatory transparency in algorithms, pricing, and seller selection.

 

At a national conclave, the trade body, along with representatives from the All India Consumer Products Distributors Federation (AICPDF) and the Organised Retailers Association (ORA), laid down demands for an independent regulatory body to combat the platforms’ anti-competitive practices such as predatory pricing and deep discounting, which violate FDI regulations.

 

According to rules, 100 per cent FDI is allowed through the automatic route in the marketplace model of e-commerce, where entities can only provide a platform for third-party sellers and cannot own the inventory. They also cannot directly or indirectly influence the price of the goods. Violation of these practices is impacting the operations of kirana retailers, the industry body said.

 

According to estimates drawn up by AICPDF, as many as 10 lakh such kirana stores have shut down operations in the last two years. The trade bodies warned that unless corrective measures are taken, the rate of closures is likely to accelerate in the coming years.

 

“Quick commerce has now expanded to 100 cities. In metro cities, 70 per cent of the retailers are using rented shops. Till now, 10 lakh shops have been shut as per our estimates. Going forward, we fear the pace of these closures will increase as operations become unviable due to rising costs and lack of business,” Dhairyasheel Patil, national president of AICPDF and senior vice-president of CAIT, said on Tuesday.