Union Commerce Minister Piyush Goyal has stated that if the ecommerce companies Flipkart or Amazon were found to be guilty of violating the existing policy in letter or spirit, action will be taken against them.
The minister assured the retail traders in the country that the government was with them and their interests won’t be harmed. However, from whatever statements he made, it does not appear as if there is any investigation underway on the e-commerce firms.
He also tweeted that the central government has put out clear guidelines for e-commerce and that strict action will be taken against those violating rules. It further added that ecommerce companies cannot harm the retail system by selling products at high discounts.
The story so far has been that the traders body, the Confederation of All India Traders (CAIT) had approached Department for Promotion of Industry & Internal Trade (DPIIT) with complaints of deep discounting resorted to by Amazon and Flipkart. The thrust of their complaint was that these two companies were violating FDI rules. CAIT wanted the department to immediately stop their festival sale.
DPIIT said they wouldn’t want to take any hasty action and summoned the representatives of both the ecommerce companies and brought them face to face. Amazon and Flipkart continued to hold that they were not in violation of any policy and that it was the sellers on their platforms that were offering the discounts they received from the respective brands. The CAIT representatives met Amazon and Flipkart executives separately with the DPIIT officials present. Praveen Khandelwal, the Secretary General of CAIT had stated they were not happy with the meetings. It is learnt that their delegation had met Piyush Goyal also and the minister had assured them that if the charges against these companies were proven then action will be taken.
Apart from CAIT, another trader’s body, the Federation of All India Vyapar Mandal has also approached the Commerce Minister and filed a complaint. They have added that the ecommerce companies are permitting payments in instalments too which has affected the business of their member traders.
One explanation for this could be that the business generated by both Amazon and Flipkart this year has been more from the Tier 2 and Tier 3 cities in the country. The traders in these cities and towns could have earlier felt ecommerce is a city-centred activity and won’t touch them. They are possibly feeling the pinch now. The fact however remains that online retail is still not more that 10-15% of the overall retail sales in the country.
From the Commerce Minister’s statement in Mumbai now, it can be deduced that his ministry has sent a questionnaire to these companies only two days back. A supplementary questionnaire is also expected to be sent. It will be based on the response to the questionnaires from the companies that any firm conclusion can be drawn by the ministry. It is not clear what kind of timeframe has been given for Amazon and Flipkart to send in their responses.
Flipkart has issued a statement to Mint that they are not in violation any policy guideline and that they are “supporting sellers, MSMEs, artisans and working with logistics partners including thousands of kiranas & general trade stores," and are also helping with job creation in the country.