Govt Investigates Amazon, Flipkart, Ordered To Disclose Top 5 Sellers: Deep Discounts Under Threat?

Govt Investigates Amazon, Flipkart, Ordered To Disclose Top 5 Sellers: Deep Discounts Under Threat?
Govt Investigates Amazon, Flipkart, Ordered To Disclose Top 5 Sellers: Deep Discounts Under Threat?

We have been bringing continuous updates to you on how India has been taking measures to safeguard their small scale local retailers from the allegedly ‘predatory behavior’ of the foreign-funded retail online joints, like Amazon and Walmart owned Flipkart.

The Commerce Minister Piyush Goyal had made it very clear that while he, along with the rule-making committee was prepared to listen to the queries companies had in the new FDI policies, he was committed to protect the small retailers.

Following the same scenario, we have a trending story for you today. It has been found out that these e-comm giants, especially Amazon and Flipkart have been enquired about their working techniques, along with a lot of other details.

Like always, the Confederation of All India Traders (CAIT) have again lodged a complaint against these giants, alleging them to have been violating the FDI policy in lieu of mega festive sales.

Flipkart & Amazon under Questionnaire, Again!

Just like every time, the Department for Promotion of Industry and Internal Trade (DPIIT) have this time again conducted separate questionnaires with these e-comm companies regarding their business models.

This time however, after heavy discounts provided by online retailers this festive season, several complaints were registered against them by the traders body CAIT, saying that these e-commerce companies have been violating the foreign direct investment policy.

This time the DPIIT has asked Flipkart and Amazon to disclose names of top five sellers on their platform, price list of goods of preferred vendors and the kind of support provided to sellers. It has also asked them to share their capital structure, business model and inventory management system.

This is obviously not the first time that the CAIT body has been alleging these ecomm companies of following unethical practices by indulging in predatory pricing. For the same reason the DPIIT has held several meetings separately with these companies and CAIT members.

The detailed questionnaire that has been sent to these companies include queries about the:

  • total number of sellers listed on their platforms,
  • list and share of controlled and uncontrolled sellers,
  • distributor and retailer price list for preferred or controlled vendors and
  • proportion of total sales from top five sellers.

The Current FDI Policy as Elicited by Goyal

We had initially covered a string of stories informing you about the current FDI policies as directed by the Commerce Minister Piyush Goyal.

Just sometime back, in order to safeguard the small scale local retailers from the allegedly ‘predatory behaviour’ of foreign-funded retail online joints, like Amazon and Flipkart, Goyal along with executives of different technological and online retailer companies, provided a detailed discussion on all of his FDI policies, active since Feb 1, 2019.

According to this FDI policy, the government permits 100% FDI in the marketplace model of e-commerce but not in the inventory-based model. The online firms are also not allowed to influence directly or indirectly prices of goods to be sold on their platforms. The companies also strongly deny having indulged in deep discounting, saying brands offer those discounts.

After multiple complaints from local retailers and them going into heavy losses, the govt wants these giants to control their selling strategies, not disrupting local retailers from making profits. Amazon and Flipkart argued they provide logistics support and other services to small Indian retailers who use their e-commerce platforms to boost their businesses.

According to consulting firm RedSeer, e-commerce companies such as Flipkart and Amazon could generate up to USD 6 billion or Rs 39,000 crore in sales this festive season.

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