Amazon and Flipkart have come under scrutiny yet again following the festive season sales

Commerce minister Piyush Goyal has summoned ecommerce platforms Amazon and Flipkart on October 10 over deep discounting issues and non-compliance to foreign direct policies (FDI) norms.

The development takes place after a delegation of the Confederation of All India Traders (CAIT) met Goyal to discuss their grievances regarding ecommerce platforms and their deep discounting methods that create an unlevel playing field for the retail traders, vendors and brick-and-mortar stores.

Goyal, addressing the delegation, said the government intends on creating a level playing field and no deep discounting or predatory pricing policies will be allowed. The ministry has summoned the ecommerce companies to act as a mediator between the online retailers and the traders body.

Are Ecommerce Platforms Lying About Inventory Control?

The CAIT had highlighted three issues in its meeting with Goyal. Firstly, it wanted ecommerce platforms to stop engaging in the B2C business of selling directly to consumers through its subsidiaries. The body says the updated FDI policies which went into effect earlier this year do not allow marketplaces to do so. Ecommerce platforms, owned by foreign companies, can only take up the role of the mediator with the registered sellers.

Secondly, the CAIT wants the government to look into how ecommerce platforms are able to offer discounts if they maintain that they do not control inventory. Thirdly, it wants the government to step in to regulate discounts such that ecommerce platforms cannot influence the market price through discounts ranging up to 80%.

The central government has acknowledged the requirement of the level playing field and has, therefore, updated the FDI norms in December 2018, to avoid any imbalance. The CAIT had also raised the issues in a letter to Goyal last month, seeking a blanket ban on festive season sales by ecommerce companies.

CAIT’s Grievances Against Amazon, Flipkart

During the meeting, the traders body asked Goyal to initiate a government audit of the ecommerce platforms and their business models, especially focussing on the quantum of business done by sellers and their authenticity.

Moreover, CAIT has demanded an interim ban on ecommerce platforms, and cash-on-delivery orders and has pushed for fully-digital ecommerce payments.

The body also laid stress on deploying an ombudsman to look into the grievances of the consumers. In addition, the CAIT also demands that the condition of data localisation should be made mandatory for such ecommerce companies.

The body goes on to demand the extension of updated FDI policy for ecommerce platform to homegrown and India-based ecommerce companies through a separate notification by the Department for Promotion of Industry and Internal Trade (DPIIT).