Flipkart's massive discount sale drew flak from traders

Flipkart’s 'Big Billion Day' sale has raised a lot of eyebrows. First it was the consumers, then traders and now the government is looking into the matter to decide whether or not more clarity is required on e-commerce retail business.

Country’s largest e-retailer Flipkart promised customers bumper discounts on October 6. However, complaints such as marking up the prices before the sale, lack of stock and website outages followed. Besides, small and big traders too raised concerns that such campaigns would badly affect players in the traditional retail market.

“We have received many inputs regarding Flipkart episode. Lot of concern have been expressed and we will look into it,” Commerce and Industry Minister Nirmala Sitharaman said.

Asked whether the government is considering any particular policy for e-commerce retailing, she said the matter would be looked into.

“Now there are many complaints. We will study the matter... Whether there is a need for a separate policy or some kind of clarification is needed, we will make it clear soon," Sitharaman, who is also the Minister of State for Finance and Corporate Affairs, added.

Earlier this week, traders body Confederation of All India Traders (CAIT) had demanded the Commerce and Industry Ministry take steps to monitor and regulate online businesses. The CAIT has also sought a probe into the business model and trade practices of e-commerce companies to find out how they are offering huge discounts during the ongoing festive season.

On a reference from the Reserve Bank of India, Flipkart is also being probed by the Enforcement Directorate for alleged violations under the Foreign Exchange Management Act. The agency is investigating to ascertain whether the company had operated on business-to-customer e-commerce model till 2012, during which it received Foreign Direct Investment (FDI) worth about $180 million.

Flipkart had in February last year shifted to marketplace model under which third-party vendors sell their products through an e-commerce website. In case the ED comes across evidence establishing that Flipkart had been working on business-to-customer model, it may attract a penalty up to three times the amount received in FDI during the period under investigation.