CAIT, which represents 500,000 merchants and
traders in India, demands a "blanket ban" on such sales and asks the
government to probe the potential violation of FDI norms
A leading Indian trader body asked the government on Friday
to ban upcoming festive sales on Amazon's local unit and its rival Flipkart,
saying their deep discounts violate the country's foreign investment rules for
online retail. The two e-commerce firms typically hold annual festive season
sales ahead of key Hindu festivals Dussehra and Diwali, which are due this year
in October, when Indians make big ticket purchases such as cars and gold
jewellery.
Walmart-owned Flipkart's six-day sale begins Sept. 29, while
Amazon is yet to announce dates. Both e-tailers promise big discounts on
everything from fashion to smartphones to home appliances and have previously
said discounts and deals are offered by sellers on their platforms.
"By offering deep discounts ranging from 10% to 80% on
their e-commerce portals, these companies are clearly influencing the prices
and create an uneven level playing field which is in direct contravention of
the policy," the Confederation of All India Traders (CAIT) said in a
letter to the federal trade minister.
CAIT, which represents 500,000 merchants and traders in
India, also demanded a "blanket ban" on such sales and asked the
government to probe the potential violation of FDI norms. Its demand is
unlikely to see government action before this year's sales kick off but it
could help frame government policy on deep discounts.
FDI RULES
India does not allow foreign direct investment (FDI) in
inventory-driven models of e-commerce, used by Walmart and Amazon in the United
States, where goods and services are owned by an e-commerce firm that sells
directly to retail customers. It modified e-commerce rules late last year to
protect the country's vast unorganized retail sector that does not have the
clout to purchase at scale and offer big discounts.
Those rules forced Amazon and Flipkart to reconfigure
ownership structures and re-jig some key vendor relationships and agreements.
Asked for comment, Flipkart said more than 100,000 sellers on its platform
awaited its 'Big Billion Days' sale event.
"We empower our sellers with business insights that
allow them to decide the best value for their own products, so they can deliver
benefits and savings to consumers and scale their businesses at the same
time," said Rajneesh Kumar, chief corporate affairs officer at Flipkart
Group.
Amazon said more than 500,000 sellers - a bulk of which are
small businesses, women entrepreneurs, startups, weavers and artisans - use the
festive sale to reach customers.
"Sellers decide the pricing for their products on our
marketplace," a spokeswoman for Amazon said.
"They offer their choice
of selection to their customers across the country at prices that they deem
fit."
Amazon last month said at an open panel discussion,
organised by India's competition watchdog, that it abides by all Indian rules
and does not influence pricing of products on its website.
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