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Govt accuses Flipkart, Amazon of violating FDI norms in e-commerce; says e-tailers try to influence prices of goods

  • E-commerce majors Flipkart and Amazon were reportedly selling goods at low prices on their different platforms

  • Both Amazon and Walmart-owned Flipkart have sought an extension of the 1 February deadline

  • On 26 December, 2018, the government tightened norms for e-commerce firms

The government has accused e-commerce majors of running hybrid marketplaces and trying to influence the prices of goods on their platforms, according to media reports.

E-commerce majors Flipkart and Amazon were reportedly selling goods at low prices on their platforms adopting different methods such as direct price discounts, covering marketing expenses, and providing concessional logistics services, said a report in The Times of India citing sources.

"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," sources were quoted as saying by The Times of India.

 Govt accuses Flipkart, Amazon of violating FDI norms in e-commerce; says e-tailers try to influence prices of goods

Representational image. Reuters.

Last month, the government had made it clear that it would not extend the deadline of 1 February for implementing the revised guidelines for e-commerce companies having a foreign direct investment (FDI), said a PTI report.

The Department for Promotion of Industry and Internal Trade (DPIIT) said it had received some representations to extend the deadline of 1 February, 2019 to comply with the conditions contained in the Press Note 2 of 2018 series on FDI policy in e-commerce.

Both Amazon and Walmart-owned Flipkart have sought an extension of the 1 February deadline for complying with the revised norms, stating that they need more time to understand the details of the new framework.

While Amazon has asked for time until June 1 this year, Flipkart has asked for six months.

On 26 December, 2018, the government tightened norms for e-commerce firms and barred online retailers like Flipkart and Amazon from selling products of the companies in which they have stake.

The government also prohibited e-commerce companies from entering into an agreement for the exclusive sale of products. As per the revised guidelines, a vendor cannot procure more than 25 percent of products from group companies of the same marketplace where they intend to sell them.

With PTI inputs

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Updated Date: Feb 06, 2019 16:23:22 IST