Flipkart, Amazon violating FDI norms, says RAI

By

Maverick Martins

Published
Apr 12, 2018

The Retailers Association of India (RAI), a group that represents brick-and-mortar retail stores across the country have sought government’s intervention on the alleged violation of norms by leading e-commerce firms Flipkart and Amazon.
 

The association which has top retail majors like Future Group and Reliance Retail have alleged that the online marketplaces are influencing prices on their platforms and illegally funding “abnormal discounts” and are thus in violation of foreign investment norms of the land.
 
According to a report in the Economic Times, The Retailers Association of India (RAI), in a letter to commerce and industry minister Suresh Prabhu have said that e-commerce marketplaces have found a way to circumvent restrictions placed on such models in Press Note 3 in 2016, through which India spelt out regulations for such operators, the report suggests. The FDI policy forbids marketplaces from participating in pricing directly or indirectly, but these companies are not only influencing selling price but also selling own brands/private labels through website.

The letter reviewed by the ET states, “Marketplace operators/technology platform providers have been operating against the spirit of the policy for some time now. There is an ambiguity around these guidelines which can be worked around by marketplace operators to overcome the restrictions defined in the B2C ecommerce policy.”
 
“This means that they can continue to operate against the spirit of the policy with no checks and balances,” the letter added.
 
Future Retail Joint Managing Director Rakesh Biyani said, “The government policy states that e-commerce players should not be allowed to participate in pricing and should not invest money in discounting. If one particular channel is misusing its money power to discount the product at a faster rate and the other channel is unable to match the price, it shrinks the market,” he recently told PTI.