Deep discounts offered by e-commerce companies on products listed on their platforms continue to irk offline retail channels. The tension between online and offline retailers has peaked during the ongoing festive season, forcing the government to step in.
Following complaints from offline retailers, the Department for Promotion of Industrial and Internal Trade (DPIIT) had initiated a probe against e-tailers over predatory pricing and violation of existing Foreign Direct Investment (FDI) norms.
The US-based Walmart that owns Flipkart, on the other hand, wrote to Prime Minister Narendra Modi, seeking a stable business environment in the country. Traders’ body Confederation of All India Traders (CAIT), in a subsequent communication sent to the Prime Minister on Tuesday, called Walmart CEO Doug McMillon’s letter as pressure tactics and condemned his attempt to intervene or meddle in India’s internal affairs and policy-making.
“These kinds of rhetoric by global players are nothing but pressure tactics to find headway into the large, existing business potential of India’s 45 lakh crore retail market and to directly control our economy by indulging in unfair and monopolistic business practices,” CAIT said in its letter. It had previously accused Amazon India and Flipkart of violating the FDI norms.
CAIT said due to predatory pricing by e-commerce firms, trade-in retail mobile sector has dropped by 60 per cent and other sectors have seen 30-40 per cent fall.
The Centre had earlier reacted on CAIT’s pleas, with Union Commerce Minister Piyush Goyal stating that DPIIT is probing Flipkart and Amazon for alleged predatory pricing.
The DPIIT had sent detailed questionnaires asking the two e-commerce majors to disclose the names of top five sellers on their platforms, price lists of goods of preferred vendors and the kind of support provided to sellers. The two firms were also asked to share the capital structure, business models and inventory management system of their top five sellers.
Days after the DPIIT’s communication, Walmart CEO Doug McMillon wrote to the Prime Minister on various issues ranging from licencing norms to a stable and open regulatory environment in India. He sought certainty and predictability in India’s business environment. The e-commerce firms have so far maintained that they follow the current FDI policy and are not indulging in deep discounting.
Contentions over deep discounting continue
According to consulting firm RedSeer, e-commerce companies Amazon and Flipkart have generated up to $6 billion, or I39,000 crore, from sales this festival season
Retail industry body CAIT has accused the two e-commerce majors of indulging in predatory pricing and violation of FDI norms
According to CAIT, due to predatory pricing by these e-commerce firms, trade-in retail mobile sector has dropped by 60 per cent and other sectors have seen 30-40 per cent fall
Following the offline retailers’ allegations, Department for Promotion of Industrial and Internal Trade has initiated a probe against the e-tailers
The e-com firms have so far denied violation of the current FDI norms or indulgence in deep discounting