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Festive Sales By Flipkart, Amazon, Snapdeal Draws Ire Of Offline Trade Body; Says FDI Norms Are Being Violated

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Flipkart Freedom Sale 2016

The ongoing Independence Day sales promotions by major ecommerce portals such as Amazon, Flipkart and Snapdeal has angered offline traders, yet again. Complaints have been raised and notice have been sent to the Commerce Ministry for alleged violation of FDI norms in ecommerce.

The Confederation of All India Traders (CAIT), which is an influential body of offline traders have expressed their displeasure and lodged a complaint with the Department of Industrial Policy and Promotion over these festive sales by ecommerce portals. Visibly irked by full page advertisements and full-fledged promotions on TV and radio, CAIT has said that Amazon, Flipkart and Snapdeal was ‘blatantly violating’ FDI norms.

In a statement, CAIT has asked DIPP to “take immediate action against these companies which are habitual in contravening the policy”.

In fact, they have also sought an appointment with Commerce and Industry Minister Nirmala Sitharaman to talk about their complaint regarding violation of FDI norms.

Last year in the month of October, CAIT had raised similar hue and cry against Amazon, Flipkart and Snapdeal for their aggressive festive sales during Dussera and Diwali season. Besides the complaints, nothing concrete came out of their initiatives.

However, this time, the complaint certainly holds weight as Govt.’s new FDI norms specifically states that ecommerce marketplaces such as Amazon and Flipkart cannot offer discounts to sell products listed by sellers. Interestingly, a recent Google report has said that discounts no longer matter for Indian customers who wish to purchase online.

But strategies adopted by leading ecommerce portals indicates that discount is the numero-uno factor which influences online buying in India.

CAIT has already launched their own ecommerce portal to fight back leading players in this niche, but it seems that their online marketplace is not getting any traction; and in order to stop their eroding profits in light of increasing online buying, they will need to approach Govt. of India time and again.

On the other hand, Flipkart is attempting to create a separate lobby of ecommerce companies to fight such lobbying tactics of offline bodies. It would be interesting to observe how they react to such opposition by CAIT.

Meanwhile, Govt. of India has created a committee to look into the matters of FDI in ecommerce and their possible violation by portals. The committee would be headed by NITI Aayog CEO, Amitabh Kant and would rope in various economic advisors from various states besides representatives from major ecommerce companies.

We will keep you updated as more news come in regarding this.

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