In a letter to Commerce and Industry Minister Piyush Goyal, the traders' body accused the e-commerce giants of flouting foreign direct investment (FDI) regulations, and demanded an investigation against the companies for "predatory pricing" and offering "deep discounts."
CAIT said 10-80% discounts offered indicate contravention of FDI policy
According to The Hindu Business Line, CAIT's letter attempts to draw Goyal's attention to Flipkart and Amazon for "continuing to blatantly violate the FDI norms applicable to e-commerce vide Press Note 2 of 2018 by indulging in below-cost predatory pricing while operating on losses."
CAIT claimed that the e-commerce companies influence pricing to offer 10-80% discounts, which is a "direct contravention of [FDI] policy."
Festive sales can be organized only by inventory owners: CAIT
Further, CAIT stated, "(Festive) sales can be organized only by inventory owners and since these companies are not the owners of inventory how can they offer discounts on products owned by sellers registered on their platform."
Hence, it deduced, "These companies hold control over the inventory which is against the FDI Policy."
It provided "substantial evidence" of predatory pricing and deep discounting, PTI reported.
What do the FDI norms dictate?
Under FDI norms, e-commerce companies are not permitted to function on inventory-driven models, where goods and services are owned by said e-commerce companies which then sell them directly to retail customers.
Late last year, India also modified FDI rules barring e-commerce companies from manipulating the price of products or offering deep discounts.
Flipkart said 1,00,000 sellers await its 'Big Billion Days' sale
Meanwhile, Flipkart Group chief corporate affairs officer Rajneesh Kumar said, "We empower our sellers with 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."
Walmart-owned Flipkart said 1,00,000 sellers await the 'Big Billion Days' sale on its platform, which begins on September 29.
Sellers decide pricing for products on our marketplace: Amazon
Amazon also told Reuters that 5,00,000 sellers, which include small businesses, women entrepreneurs, start-ups, weavers and artisans, await its festive sale to reach customers.
An Amazon spokesperson said, "Sellers decide the pricing for their products on our marketplace."
The spokesperson added, "They offer their choice of selection to their customers across the country at prices that they deem fit."