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Sunday, October 11, 2015

CAIT FILED COMPLAINT AGAINST E COMMERCE COMPANIES FOR FLOUTING FDI POLICY

DEMANDED RESTRICTIONS ON CONDUCTING SALES

The Confederation of All India Traders (CAIT) has charged forthcoming Great Indian Festive Sale by Amazon and Big Billion Day Sale of Flipkart from 13th October to 17th October and Electronics Monday Sale of Snapdeal on 12th October,2015 is in violation of FDI policy of the Government. Under FDI policy these Companies can not undertake retail trading activities-said CAIT.The CAIT alleged that these e- commerce portals are circumventing the law and engaged in B2C activities which is prohibited for e commerce marketplace portals.

In a complaint sent today to Secretary, Department of Industrial Policy & Promotion, Ministry of Commerce, the CAIT has demanded that not only these Companies be restricted to conduct such Sales but necessary action should be taken against them for violation of FDI policy. The CAIT said that as per clause 6.2/16.2/1 of Consolidated FDI Policy Circular 2015 " 100% FDI is allowed in Business to Business (B2B) e commerce & not in retail trading.Existing restrictions on FDI in domestic trading would also be applicable to e commerce".

The CAIT has also sent a copy of their complaint to Union Finance Minister Mr.Arun Jaitley and Union Commerce Minister Mrs.Nirmala Sitharaman calling for their immediate intervention and directing the concerned officials to take immediate necessary action.

CAIT National President Mr. B. C. Bhartia & Secretary General Mr. Praveen Khandelwal said that these Companies have solicit general public in to their respective Sales by big advertisement campaign on print,electronic & social media. Since they have received Foreign investment as such they are allowed to undertake B2B e commerce activities and not Business to Consumers (B2C). The said advertisements addressed to the public in general tantamount to retail trading.

Both Mr. Bhartia & Mr. Khandelwal said that these Companies claims to be a marketplace and therefore can provide only a technology platform for the sellers who are registered with them.Since ownership of inventory does not hold by the said Companies they can not offer 'Sale" or "Discounts" in totality on their online portals but they are doing so which also establishes that they are not marketplace and as such openly flouting FDI policy.

Both leaders further said that if these Companies are actually doing B2B business then where is the need of big advertisements addressed to general public. Even the sales which will be materialized on these e commerce portals would be made to direct consumers and not to any business establishment. Therefore, by receiving FDI in their business format, they are doing B2C which is a violation of FDI policy.