Amazon, Flipkart, Snapdeal Accused of Violation of FDI Norms

Amazon, Flipkart, Snapdeal Accused of Violation of FDI Norms

Confederation of All India Traders (CAIT), leading advocate for small traders and businesses in India, with around 6 crore merchants across 40000 affiliates, urged the government to take action against e-commerce firms like Amazon and Flipkart, accusing them of violation of FDI norms by undertaking retail trading activities.

The CAIT wrote to Union Commerce Minister Suresh Prabhu in this regard, claiming that the companies were indulging in a “blatant violation” of the FDI (foreign direct investment) policy.

“Amazon has declared Great Indian Festival Sale from 21 September to 24 September, 2017 and Flipkart has conducted Big Billion Day Sale from 20-24 September 2017, Snapdeal has announced Unbox Diwali Sale from 20 to 25 September 2017, Jabong Sale from 20 to 24 September 2017, Myntra Sale from 20 to 24 September 2017, Shopclues has announced Maha Bharat Diwali Sale from 20 to 28 September 2017 which is a blatant violation of the guidelines issued by the DIPP,” CAIT alleged.

In its complaint, CAIT said, “the advertisements issued by them in past days amounts to soliciting retail customers at their portals and influencing the prices and creating an uneven level playing field”.

“Under FDI policy these companies cannot undertake retail trading activities but these e-commerce portals being habitual offenders of (the) government policies are circumventing the law and engaged in B2C (business-to- consumer) activities which are prohibited for e-commerce marketplace portals,” CAIT alleged in the complaint to Prabhu.



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The traders’ body is looking for the government to take necessary actions these e-commerce firms for the violation of FDI policy.

“The Confederation of All India Traders has charged Amazon, Flipkart and Snapdeal etc for violation of FDI policy for e-commerce of the Government issued on 29 March 2016 by Department of Industrial Promotion & Policy, Ministry of Commerce,” the traders’ body said.

According to CAIT, as per the FDI policy guidelines, e-commerce portals receiving foreign direct investment can conduct business activities for B2B (business-to-business) and will not be allowed to undertake B2C (business-to-consumer) business activities.

CAIT Secretary General Praveen Khandelwal said that by inserting big advertisements in the media, the companies are attempting to address consumers directly which is a contravention of the FDI guidelines.

“They (e-commerce firms named) do not have ownership of the inventory of the products purported to be sold on their technology platform, how can they offer discounts or discounted prices on the products for which they are not the owners-questioned trade leaders,” Khandelwal claimed.


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