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Amazon, Flipkart attempt to end-run FDI rules?

Feb 6, 2019 by The Passage Team
Amazon, Flipkart attempt to end-run FDI rules?

Amazon and Flipkart have allegedly devised workarounds to tackle the new FDI rules in force since February 1.

“Flipkart and Amazon were influencing prices of goods on their platforms through various means, including direct price discounts, covering marketing expenses (marketing campaigns, EMIs, exchange offers) and extending concessional logistics services (packaging, courier, returns), e-wallet cashbacks,” a source told Times of India. “Both Flipkart and Amazon involved various intermediaries and group entities in the chain to divide these discounts and spread losses, which impact the domestic retail sector.”

Amazon and Flipkart have allegedly found ways to keep the prices competitive including sourcing from the manufacturers in bulk and taking a loss to route the merchandise to the established sellers on the platforms, logistics adjustments, cash backs etc by bringing in multiple players in the value and supply chains.

“These comments are completely baseless and untrue. We have received no such communication from the government. We have always been and continue to be compliant with all local laws and regulations,” an Amazon India spokesperson said, according to a Times of India report.

“The impact on Flipkart seems to be less in the short term but there will be long-term ramifications on its business model due to the tweaks in the policy,” TOI quoted a Flipkart executive as saying.

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