The Department of Promotion of Industry and Internal Trade (DPIIT) will hold talks with representatives from Amazon and Flipkart regarding repeated complaints by offline retailers against the deep discounts the e-tailers are offering during the festive season.
Members of the Confederation of All India Traders (CAIT), All India Mobile Retailers Association and All India Consumer Products Distributors Federation have alleged that Amazon and Flipkart are violating FDI policies by influencing prices through heavy discounts, thus hurting local businesses.
The representatives of the respective bodies met Commerce and Industry Minister Piyush Goyal to discuss the matter.
“The delegation alleged that e-commerce companies are involved in predatory pricing, deep discounting, loss funding and exclusivity of various products which is not allowed under FDI policy,” said CAIT in a statement.
The Government is likely to address the woes of local retailers, but is not inclined to take any hasty decisions in the matter.
“He (Goyal) assured the delegation that if need arises and unethical business practices are proven, the Government may order an investigation,”said Praveen Khandelwal, Secretary General, CAIT.
The trade leaders alleged that the loss accrued to sellers registered on online portals by selling commodities at a much cheaper rate is being subsidised by the parent company of these marketplaces, the manufacturers or some other entity is funding losses by remaining anonymous for their own benefit.
Another reason for funding losses could be surplus of products that have to be sold as they originate from grey market.
Since these portals are marketplace and allowed to provide only on technology platform, they cannot undertake any sales or influence the prices as per Press Note No 2 of FDI policy 2016.
The delegation asked Goyal to initiate a Government audit of business module in e-commerce portal particularly the quantum of business done by sellers and their authencity.
It also demanded that as an interim measure, immediate ban should be imposed on such e-commerce portals. The system of cash on delivery should be stopped and all payments by the consumers should be made digitally.