Amazon, Flipkart, Snapdeal Cannot Promote Festive Season Sale; They Are Violating FDI Norms – CAIT

Confederation of All India Traders (CAIT), which is an influential body of offline traders and retailers has complained to Ministry of Commerce regarding heavy discount sales and offers promoted by portals like Flipkart, Amazon and Snapdeal.

In a statement issued by CAIT, it was claimed that such portals are violating FDI norms in India, as these are just technological platforms for enabling ecommerce transactions; and are not retailers themselves.

Considering that both Amazon and Flipkart have started their 5 day long online shopping bonanza from today, the timing of this statement and complaint holds major significance. In case the Ministry of Commerce finds that these heavily promoted festive season sales are violating FDI norms, then they may even ask these ecommerce biggies to stop these sales offers.

Without naming any particular ecommerce portal, CAIT alleged that the heavy promotions on newspapers, social media and electronic media by “these companies” are equivalent to retail trading; something which is not permitted, considering that they are only technological platforms. Hence, they are openly violating FDI norms.

CAIT said, “These companies claim 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.”

CAIT has already sent their complaint to Department of Industrial Policy & Promotion under Ministry of Commerce, and demanded that not only these sales and discount offers be asked to stop, but also these companies should be investigated for violating FDI norms.

As per initial reports coming in, Flipkart’s Big Billion Day has already enabled sale of 10 lakh products in the first 10 hours of the day. And considering the buzz and hype generated by both Flipkart and Amazon India, it is expected that the sales volume will increase in the coming days. (although there are few complaints from users, regarding the sales pitch, and continuous trouble with app-only shopping experience)

In case Ministry acts on this complaint and orders ban on such activities, then it can be a major dampener for e-shoppers.

We will update you as more details come in.