CAIT demands government audit of Flipkart, Amazon, looks into online discounting

By

Isabelle Crossley

Published
Oct 15, 2019

The Confederation of All India Traders asked the Minister of Commerce and Industry Piyush Goyal to audit Flipkart and Amazon on Monday, believing the e-commerce giants are engaging in deep discounting. 

The CAIT sent a letter to Union Minister Goyal on October 14 asking him to investigate the business models of foreign-owned e-commerce businesses Flipkart and Amazon to ascertain if they are operating legally, the Press Trust of India reported. The CAIT has also sent letters to over 40 retail businesses’ manufacturers to clarify if e-commerce businesses are discounting items to a harmful degree, TNN reported.

“If it is found that the manufacturers are allowing discounts for sales only through e-commerce portals, then CAIT may approach the Competition Commission,” the CAIT’s head BC Bhartia told TNN. “It amounts to unfair trade practice if the manufacturers are offering heavy discount on the same product sold on an e-commerce portal but not to the regular traders down the chain.”

The CAIT has urged Goyal to convene a meeting on the issue, especially considering the recent festive sale season when some e-commerce businesses offered up to 80% discounts on goods ranging from fashion to electronics. Amazon and Flipkart maintain that independent brands themselves offer large discounts and they have no part in the discounting. 

CAIT secretary general Praveen Khandelwal told the Press Trust of India that it is investors that are funding the e-commerce business’ losses caused by heavy discounts in order to increase the business’ valuation. "It appears that it is not a business model but a valuation game of investors who are hugely benefitted when they exit their investment at a time when the valuation of the company becomes too high," said Khandelwal.