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Explanation sought from Amazon, Flipkart on alleged FDI norms violations

Oct 21, 2019 by The Passage Team
Explanation sought from Amazon, Flipkart  on alleged  FDI norms violations

The Indian government has asked ecommerce majors Amazon and Flipkart to provide details of their top five sellers after complaints of FDI (foreign direct investment) norms violations have surfaced.

The Department for Promotion of Industry and Internal Trade (DPIIT) has asked if the marketplaces are compliant with goods and services tax (GST) in letter and spirit. DPIIT has sent two questionnaires to the ecommerce firms, seeking details of capital structure, business models and inventory management systems, Economic Times reported.

However, Amazon has denied any wrongdoings.

“Amazon has a high bar for compliance, and we continue to comply with all applicable laws of the land. Amazon.in is a third-party marketplace where sellers offer products to customers for sale. Sellers on amazon.in have the absolute discretion to decide what products to sell and at their prices. Amazon cannot, and does not, participate in sellers’ decision related to their products and their prices,” Amazon told Economic Times in an emailed response.

Commerce and industry minister Piyush Goyal on Thursday said the government would take stringent action against ecommerce companies if they are found to be violating India’s ecommerce policy in “letter or spirit.” CAIT (Confederation of All India Traders) has met CCI (Competition Commission of India) chairman AK Gupta to urge action against Flipkart and Amazon for sharp practices.

CAIT has submitted evidence predatory pricing, deep discounts and compensating the losses to their sellers by Amazon and Flipkart. “The commission is committed to establishing a uniform and competitive business environment in the country, and if anyone adopts unhealthy trading practices, influencing prices in any manner and create an uneven level playing field in the market, the Commission will sure take action as per law,” Gupta said in a press statement.

The government has barred online marketplaces from selling products from sellers where they have equity interest and from entering deals with any brand to sell any product exclusively on their platform.

Goyal said the government will take stringent action against those who are flouting FDI rules. “No e-commerce marketplace can illegally leverage multi-brand policy for the growth of the electronic marketplace,” he said.

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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