Accusing e-commerce platforms of openly flouting FDI rules, traders’ body CAIT has asked Finance Minister Piyush Goyal to conduct an investigation into and place a blanket ban on festival sales by e-commerce companies for indulging in “predatory pricing” and “deep discounting”. Praveen Khandelwal, national secretary-general of CAIT, wrote to the minister on September 13 (see letter below), with “substantial evidence” of e-commerce companies indulging in predatory pricing and deep discounting.
CAIT raised these issues against e-commerce companies:
* E-commerce companies are “deeply engaged” in B2C business and the quantum of B2B business is negligible, said CAIT. This is against the FDI rules, which only permits e-commerce marketplaces to undertake B2B transactions with sellers registered on the marketplace. The CCI’s market survey on e-commerce also sought details on B2B sellers on e-commerce platforms, specifically asking about the percentage of sales via B2B.
* They control inventory: The fact that e-commerce companies offer discounts shows that they have control over the inventory. Since sales can only be organised by inventory owners, and if e-commerce companies do not control the inventory, how can they offer discounts on products owned by sellers registered on their platform? Under the FDI rules, if e-commerce marketplaces exercise control or ownership over the inventory, they wouldn’t be marketplaces anymore.
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