CAIT has accused e-commerce companies Amazon and Flipkart of delivering non-essential items violating the COVID-19 lockdown restrictions to gain an undue advantage of the COVID-19 pandemic.
Traders’ body, the Confederation of All India Traders (CAIT), has accused e-commerce companies Amazon and Flipkart of delivering non-essential items, violating the COVID-19 lockdown restrictions, to gain undue advantage of the pandemic.
"In furtherance of the illegal activities being carried out by Amazon and Flipkart, they have started taking undue advantage of the pandemic by making illegitimate financial gains by supplying non-essential items which have been strictly prohibited by many state administrations due to ongoing lockdowns to prevent the spread of COVID-19 pandemic," the traders' body stated in its letter to Minister for Commerce and Industry Piyush Goyal on April 26.
In the letter, CAIT has requested the Union Minister Piyush Goyal to issue a clarification on the foreign direct investment (FDI) policy with respect to inventory control by foreign e-commerce companies.” It is established beyond doubt that Amazon and Flipkart control the few preferred sellers that make most of the sales on their marketplace platforms, in a clear violation of Press Note 2 of 2018,” the letter stated.
According to the 2018 Press Note 2 by the Department for Promotion of Industry and Internal Trade, e-commerce marketplaces cannot exercise ownership or control over the inventory, and the entity with an equity stake in e-commerce companies or its group companies or control over its inventory will not be allowed to sell its products in the marketplace.
The government needs to take strong action against foreign e-commerce firms for using unfair means to gain market share at the cost of small merchants in the lockdown period due to the recent COVID-19 pandemic, said the traders’ body. “Foreign e-commerce companies are trying to capture market share from small stores/traders/ kiranas by defining every item as essential, including mobile phones and accessories. Whereas the physical shops which can sell these items are not allowed to open during the lockdown,” the letter stated.
The current situation is helping the e-commerce giants make a profit at the expense of “8.5 Crore small and medium merchants, their families and dependents,” the letter added. Pointing to the stark difference between the financial health of the MSMEs in India’s retail sector and the profits made by the e-commerce entities, the letter said the MSMEs have lost their business, with many of them shutting down. Amazon’s marketplace in India, on the other hand, has reported a 42% jump in revenue.
Stressing that the e-commerce firms have flouted every rule in the book, the letter stated: “The FDI policy has always prohibited control by foreign marketplace platforms, e-commerce entities over inventory (and prices) to protect the fabric of the retail industry.” The CAIT letter has come days after a number of state governments issued lockdown measures, providing only a four-to-five-hour window to shops selling essential items, including groceries.