Govt Will Investigate Deep Discounts Offered By Amazon, Flipkart; Strict Action If FDI Rules Broken

As per the reports, the government is working on the complaints raised against e-commerce giants like Flipkart and Amazon, wherein they were accused of violating foreign direct investment (FDI) norms and planning to take corrective actions.

While on the other hand, the well-known e-commerce companies are saying that they have followed the rules mentioned in FDI norms.

What Is The Cause Of This Conflict?

The e-commerce portals were constantly accused of providing deep discounts and also claimed to price distortion by small retailers.

But on Thursday, Flipkart and Amazon told that they are not going against any law made by the government. Also, they refused that they had any irregularities in their operations. 

On this point, one official concerned in the matter said “Specific instances and irregularities have been raised by the retailers about platform sales, but how much of that applies to which platform, we are not sure. We will assess the veracity of these complaints. If there is any merit in them, then necessary correctives will be taken,”

What Happened During The Meeting?

The retail, mobile and FMCG industry associations met with commerce and industry minister Piyush Goyal and also complained about the FDI rule violation by e-commerce companies like Amazon and Flipkart. 

They said that these E-commerce companies are influencing prices during their sales period.

On Thursday, during the meeting, Confederation of All India Traders (CAIT) showed emails sent by Flipkart and Amazon in which they were asking sellers to offer discounts on sharing basis and reward them back with credits.

What Is The Conclusion?

This meeting was attended by Flipkart CEO Kalyan Krishnamurthy while Amazon was represented by its legal and government affairs officials.

According to another official “They have said there are no irregularities and they are following the rules. We heard them out and will analyze whatever they said,”.

He added that the meetings were about FDI issues and not e-commerce in general.

The discussions were not a point-by-point rebuttal of the allegations made by CAIT, All India Mobile Retailers Association and All India Consumer Products Distributors Federation in their meeting with Goyal.

According to the delegation of traders, the e-commerce companies participated in predatory pricing, deep discounting, loss funding and exclusivity of various products, which is against the FDI policy.

They said that these portals are marketplaces, they can only provide the technology platform and cannot undertake any sales or influence prices.

So the e-commerce portals were asked to submit their business practices document which was actually asked two months ago, according to officials.

These issues came up before Goyal’s US visit which is planned after a fortnight. Officials said, “Any irregularity in that document could become a bargaining chip for India and impact India-US trade negotiations,”.

Amazon said “We had an open and transparent discussion with DPIIT officials. We thank the government and particularly ministry of commerce and industry for the opportunity and we are always available for further engagement as needed,”. (reference ET)

Amazon and Flipkart had announced a huge Diwali sale by witnessing the arrival of the festival season. Also recently they had their annual festival sales which got a huge response from the audience.