The All India Traders Federation has welcomed the ED action. (representation)
New Delhi:
The Enforcement Directorate on Thursday conducted searches against some “key vendors” operating on the platforms of e-commerce giants Amazon and Flipkart as part of a probe into foreign direct investment “violations”, official sources said.
A total of 19 premises of these “preferred” vendors located in Delhi, Gurugram and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) were covered as part of the action, sources said.
It is learned that the ED has inspected the documents and taken some copies from the premises of six unnamed vendors.
Sources said the federal agency has initiated the probe after receiving several complaints against two major e-commerce companies under the provisions of the Foreign Exchange Management Act (FEMA) where they are alleged to have “violated India’s FDI (Foreign Direct Investment) of goods or services”. Rules that directly or indirectly affect the selling price and provide a level playing field for all sellers.
There was no immediate response from the two e-commerce companies.
The Confederation of All India Traders (CAIT) has welcomed the ED action.
“CAIT, along with many other trade bodies, has been raising these issues for the past few years. I welcome the enforcement directorate’s action as a step in the right direction,” said CAIT general secretary and Delhi BJP MP Praveen Khandelwal. statement.
He claimed that the Competition Commission of India (CCI) had issued “penalty notices” to Amazon and Flipkart and their “preferred” sellers for “indulging” in anti-competitive practices and adversely affecting small traders and ‘kirana’ (grocery). .grocery store).
As per the existing rules, 100 percent FDI in the market model of e-commerce is allowed through the automatic route. But foreign investment is not allowed in inventory based model.
In the marketplace model, e-commerce organizations can only provide a platform to third-party sellers and they cannot own the inventory. They cannot directly or indirectly influence the price of the commodity.
It has been reported in the past that the CCI, which works to ensure fair trade practices in the market sectors, is already looking into the alleged anti-competitive practices of e-commerce companies.
CAIT and Mainline Mobile Retailers Association AIMRA had also petitioned CCI demanding immediate suspension of operations of Flipkart and Amazon as they alleged that the companies are indulging in predatory pricing and burning cash to offer heavy discounts on products.
These practices, in turn, are creating a gray market of mobile phones, hurting the exchequer “as gray market players evade taxes”, they said.
Commerce and Industry Minister Piyush Goyal had recently questioned Amazon’s announcement of a US$1 billion investment in India, saying the US retailer was not doing any major service to the Indian economy but was making up for the losses it had suffered. the country
He said in August that their huge losses in India “reek of predatory pricing”, which is not good for the country as it affects millions of small retailers.
Goyal said e-commerce companies are eating up small retailers’ high-priced, high-margin products that are the only items through which mom-and-pop stores survive.
The minister had said that with online retail sales growing rapidly in the country, “are we causing massive social disruption with this massive growth of e-commerce”.
Khandelwal said CAIT has asked the CCI and ED to protect the businesses of small traders.
“No one is above the law in the new India under Prime Minister Narendra Modi ji. I am hopeful that the law will now take the right path and protect the livelihood of small shopkeepers.”
“This government is committed to ensure that no body harms the business community. In response to the many complaints filed by the business community about FDI violations and anti-competitive practices of fast-commerce companies like Blinkit, Swiggy and Zepto, we. And urges that the businesses of small traders not be irreparably damaged,” he said in a statement.
(Other than the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)