Retailers: Amazon has flouted FDI laws
The Retailers Association of India (RAI) filed a complaint with the government against Amazon.in, alleging that it has violated Indian FDI laws. Amazon recently announced Rs.200 gift vouchers to shoppers, after it was named the most-visited e-commerce website in the country. RAI alleged that gift vouchers are business-consumer transactions which violate India's FDI laws, which only allow business-business transactions by foreign funded e-commerce companies.
Retailers contend that e-commerce marketplaces are essentially retailers as they "accept payments, make deliveries, take returns, and make refunds." A.M Singhvi who represented the retailers in court said that the only difference was that the e-commerce portals were missing in physical form, and lacked any e-commerce elements. The retailers who suffer due to e-commerce discounts wanted a clear demarcation.
Indian law forbids FDI in "business-to-consumer e-commerce" while allowing 100% FDI in "business-to-business segment."
India's prime brick-and-mortar retailers hauled the government to court, commanding for a 'level playing field' in FDI norms with regard to the e-commerce players. Retailers Association of India which embodies top retailers such as Future Group, Shoppers Stop and Reliance Retail took the step of taking the centre to court. The association blamed e-commerce portals of "circumventing" FDI laws by declaring themselves as marketplaces.
A petition was filed by the All India Footwear Manufacturers and Retailers Association (AIFMRA) against the online retailers contending that they had been violating the FDI norms. The retailers claimed that the "transactions of e-tailers are taxed by state as a sale means that they are in a B2C business", which was a contravention of the present FDI policy.
The Mobile Retailers Association admitted a case at the Kerala High Court regarding FDI violations. The retailers contended that firms including Amazon, Flipkart and Snapdeal were entering into bulk deals with mobile manufacturers making business almost impossible for retail players. This strategy was wiping out the traditional sellers and resulted in lakhs of retail jobs being lost.
The Delhi High Court ruled that the e-commerce companies were engaged in "a prima facie violation" of foreign investment regulations and has issued a notice to the Central Government. A high court bench has asked the Centre to respond to its notice within a 2-week time-frame. The subsequent hearing on the subject has been scheduled for 14 October.
The Delhi High Court declined from passing any interim order against the 21 e-commerce firms, like Snapdeal, Jabong and Myntra over accusations that they infringed on India's foreign direct investment rules. The Enforcement Directorate was asked to initiate a probe by the court. The court asked the Delhi government, the Central government and ED to submit affidavits in 4 weeks on the matter.
In a fight against e-commerce, the country's apex traders' body Confederation of All India Traders (CAIT) has decided to launch 'e-lala', its own hyperlocal e-commerce venture. It will be supported by around 5.5 crore small traders with brick-and-mortar stores. Only a trader "who owns a physical store can only sell his products on the site." The payment gateway will be handled by HDFC Bank.
Launched by Urban Development Minister Venkiah Naidu, the e-lala portal will target getting 50,000 sellers in 100 cities by March 2016.
