Trade forums raise policy violation issue ahead of festive sale

Hours before online marketplace biggies Amazon, Flipkart and Snapdeal clash during the big-bang festive season sale, questions on whether these companies are violating foreign direct investment (FDI) norms for e-commerce, issued in March, are being raised again.

Industry experts said these companies have tweaked the way they work and were now adhering to the norms set by the government around not influencing pricing.

FAST FACTS ON SALES
  • Discounts ranging from 10 to 70% likely on Amazon, Flipkart and Snapdeal
  • Marketplaces claim discounts are given by sellers and not them
  • CAIT has already lodged a complaint with DIPP

Also, industry insiders said the Enforcement Directorate (ED) has already taken details from these companies and have not found any evidence of malpractice till now.

Retailer and trader associations are, however, in a wait-and-watch mode, and are planning to observe every move made by these online marketplaces before taking any action.

Associations, such as the Confederation of All India Traders (CAIT), are planning to lodge a protest with the commerce as well as consumer affairs ministries and may even approach Finance Minister Arun Jaitley. In August, before online marketplaces had organised their sales centred around Independence Day, CAIT had filed a complaint with Department of Industrial Promotion and Policy (DIPP). The body has demanded these companies should be restricted from conducting such sales and also sought closure of such portals over violation of the FDI policy.

“If the government is not in a position to enforce a policy, it is better that they scrap it ,” said Praveen Khandelwal, secretary general, CAIT.

Experts are seeing a rise in the number of cases where offline retailers, trade associations and even merchants of online marketplaces are going to the courts, asking for interventions of agencies such as the Competition Commission of India and ED.

E-commerce companies, however, believe they are not flouting any norms. “The point is, the particular issue is being raked up close to these sales. ED has gone with a fine comb over the operations and, I believe, has found out that we are not influencing pricing and but the sellers who are doing it. We are following all norms and acting as a true marketplace,” said a senior executive of an online marketplace.

Online marketplace players claim they are well within their limits and are doing things according to their ‘interpretation’.

Retailer associations and brands alike are, however, keeping a watchful eye on the e-commerce sales for any direct influencing in pricing. “A job of a marketplace is to complement a retailer and not compete with them. Every retailer and brand would keep an eye on sales. If they see that they are influencing pricing, then even if we have to drag someone to court, we will do that. Government norms are clear on influencing pricing,” said Kumar Rajagopalan, chief executive officer, Retailers Association of India.

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