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EComm portals’ festive offers under the lens

Small retailers have alleged that Amazon & Flipkart violated FDI norms during their festive sales.

, ET Bureau|
Updated: Oct 11, 2019, 08.28 AM IST
Amazon and Walmart-owned Flipkart kicked off the festive season sales last weekend and plan to have another round of sales in the next few days.
The government is looking at complaints that global ecommerce giants have violated foreign direct investment (FDI) norms and will take corrective action against those flouting them even as Amazon and Flipkart said they are following the rules.

Countering allegations by small retailers of deep discounts and price distortion, Amazon and Flipkart told the government on Thursday that they are not flouting any rules. In separate meetings with officials of the Department for Promotion of Industry and Internal Trade (DPIIT), they denied any irregularities in their operations.

“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,” said one official aware of the matter.

The meetings were called a day after retail, mobile and FMCG industry associations met commerce and industry minister Piyush Goyal and complained of violation of FDI rules by Amazon and Flipkart by influencing prices during their just-concluded festive sales. At Thursday’s meeting, Confederation of All India Traders (CAIT) showed emails sent by Flipkart and Amazon to sellers asking them to offer discounts on a sharing basis and reward them back with credits.

While Flipkart CEO Kalyan Krishnamurthy was present at the meeting, Amazon was represented by its legal and government affairs officials.

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

According to officials, the meetings were about FDI issues and not ecommerce in general, and the discussions were not a point-by-point rebuttal of the allegations made by the CAIT, All India Mobile Retailers Association and All India Consumer Products Distributors Federation in their meeting with Goyal.

Amazon and Walmart-owned Flipkart kicked off the festive season sales last weekend and plan to have another round of sales in the next few days. E-tailers in India achieved a record $3 billion (Rs 19,000 crore) of gross merchandise value during the September 29-October 4 sales, according to a report by RedSeer.

The delegation of traders alleged that the ecommerce companies were involved in predatory pricing, deep discounting, loss funding and exclusivity of various products, which are not allowed under the FDI policy. Since these portals are marketplaces, they can only provide the technology platform and cannot undertake any sales or influence prices.

ET reported last week that the government would address the complaints of predatory pricing by the ecommerce duo during the festive season sales but would avoid any knee-jerk decision.

Sources said the government also asked the two online platforms to submit their business practices document, which had been sought two months ago. The issue had come up during Goyal’s US visit a fortnight ago. “Any irregularity in that document could become a bargaining chip for India and impact India-US trade negotiations,” said one person.

“We had 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,” Amazon said in a statement.
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