E-commerce discount woes: DPIIT wants Amazon, Flipart to name top 5 sellers, price of vendors, fund flow, business model

After the festive sales, and both Amazon and Walmart-owned Flipkart claiming best sales, and after repeated complaints by the CAIT, the Department for Promotion of Industry and Internal Trade (DPIIT) has sent a questionnaire to Amazon and Flipkart over their adherence to the norms for Foreign Direct Investment (FDI).

The questions are concerned with their fund flow, business model and inventory management, people in the know of things said, adding that it also asks the names of their respective top five sellers and price list of vendors on these platforms, according to IANS.

Discounts offered by e-commerce portals have been the proverbial red flag for the Confederation of All India Traders (CAIT). Traders' body CAIT has time and again approached the government for its intervention regarding the "deep" discounts offered by these platforms during festival sales.

Last month, the trader's body which represents 500,000 merchants and traders in India, demanded a "blanket ban" on online festival sales and asked the government to probe the potential violation of FDI norms.

CAIT recently sought an independent audit of the business models of both Amazon and Flipkart on the charges of predatory pricing and deep discounting, among others.

Official sources said that the department would look into their replies and then decide whether more clarification is required or any action needs to be taken.

Representational image. Reuters.

"It is basically related to the complaints of small retailers, and a series of questions have been sent to them which are relevant to understand the allegations which small retailers make about these online platforms which are under FDI," a source told IANS.

Questions sent to Amazon and Flipkart by IANS, however, were not immediately replied, the news report said.

The move by DPIIT comes after Commerce Minister Piyush Goyal last week warned of strict action against e-commerce companies if they were found violating India's e-commerce policy.

In a related development, CAIT on Sunday alleged that not only the e-commerce companies but even large number of brands in mobile, FMCG, electronics, electrical appliances, footwear, garments, gift articles, watches and other segments as well as several banks are also responsible for distortion of prices of different products on online portals.

"It is apparent that these brand-owning companies are also exploiting the offline market being hand in glove with e-commerce companies having separate price policy for both online and offline markets which is a clear violation of the Competition Act," CAIT said in a statement

It also criticised the banks which give cashback and different types of discounts for purchasing goods from e-commerce portals by making payments through their respective credit or debit cards.

The body also said that Prime Minister Narendra Modi should constitute a group of ministers (GoM) to look into the distortions in both e-commerce and brick-and-mortar formats of retail.