Problems for Amazon and Flipkart! DPIIT seeks response on FDI rules violation

The Confederation of All India Traders (CAIT) has sought Prime Minister Narendra Modi's intervention in the matter of alleged unethical business practices of big e-commerce players like Amazon and Flipkart. CAIT has alleged that these companies are openly violating Press Note No. 2 of 2018 FDI policy and thereby creating various distortions, uneven playing field, unfair and unethical competition and making all efforts to destabilise the long standing retail trade in India,  which is also the largest employment generator in the country after agriculture that also makes a handsome contribution to national exchequer.

Secretary, Department of Promotion for Industry and Internal Trade, Guruprasad Mohapatra told Zee Business that both e-commerce companies have been asked for a few clarifications on violation of FDI norms. The DPIIT is in the process of investigating  the matter further. 

Notably, government has always tried to keep FDI rules simple, in order to attract investments. The Union Cabinet has announced major reforms to in the sectors like single brand retail, contract manufacturing and even in coal business, which will impact industries. India has had a record breaking FDI investments in last 4 years and the current inflow in also good.

"CAIT took the matter of unethical business practices of Amazon and Flipkart and other e-commerce companies to the court of Prime Minister Narendra Modi and in a communication while briefing him of the crucial issues pertaining to business model of both the companies has sought his immediate intervention," a CAIT statement said on Wednesday.

The traders' body has also opposed the business practices of both these giant online players. The body stated that loss acquiring businesses can not sustain in the market for very long without heavy funding or backing by investors to recover losses.

''The allegations against online commerce companies are being investigated by the ministry. These are big players and we'll have to give them some time to come up with structural solutions. Meanwhile, the data of September states that the situation has improved. Also, corporate tax rate cut, capital infusion in banking sector, packages for MSME sector will definitely improve business in near future. However, as far as online e-commerce companies are concerned, we are already following the investigation process and shall come up with solutions soon,'' Mohapatra added.