Govt seeks details of top 5 sellers on Amazon, Flipkart
21 October 2019
The government has asked Amazon and Flipkart to provide details of their top five sellers, following complaints by traders body that the e-commerce firms were in violation of foreign direct investment (FDI) rules.
The Department for Promotion of Industry and Internal Trade (DPIIT) under the commerce ministry has sought details from the ecommerce marketplaces of business done by top five sellers, investments and commission agreements with vendors.
The department also wants to know if there are variations of commission agreements with sellers, the criteria for commissions and whether they are discretionary, as well as details of any associations with payment gateways. It has also sought lists and shares of controlled and uncontrolled sellers, distributors and retail price lists for preferred/controlled vendors.
Traders' body, the Confederation of All India Traders (CAIT) on Sunday demanded a high-level enquiry by the centre into the "unholy nexus" of e-commerce firms, companies owning brands and banks for causing price distortion in the country’s e-commerce market.
The government had, in December last year, issued a clarification stating that marketplaces are barred from selling products from sellers where they have an equity interest and from entering into deals with any brand to sell any product exclusively on their platform.
The DPIIT is understood to have also sought to ensure that the marketplaces are compliant with goods and services tax (GST) in letter and spirit.
DPIIT has sent two questionnaires to the ecommerce firms, seeking details of capital structure, business models and inventory management systems.
Amazon said it is in compliance with government rules even as it admitted that it is a third-party marketplace where sellers offer products to customers for sale and that sellers on Amazon have the absolute discretion to decide what products to sell and at what price.
“Amazon cannot, and does not, participate in sellers’ decision related to their products and their prices,” said the spokesperson.
Commerce and industry minister Piyush Goyal on Thursday said the government would take stringent action against ecommerce companies if they are found to be violating India’s ecommerce policy in “letter or spirit.”
“We appreciate the initiative by the commerce and industry minister to set up an interactive platform for players to come together,” the Amazon spokesperson said. “This will help the entire ecosystem to thrive.”
CAIT has often complained against predatory pricing and discounts, along with other violations of the FDI policy, particularly during festive season, when attractive offers abound.
Ecomm firms like Flipkart and Amazon could generate up to $6 billion, or Rs39,000 crore, in sales this festive season, according to consultancy RedSeer.
Praveen Khandelwal, secretary general of the Confederation of All India Traders has urged Prime Minister Narendra Modi to constitute a Group of Ministers (GoM) to look into the alleged distortions, both in the e-commerce and brick and mortar format of retail.
Commerce minister Piyush Goyal had, earlier this week, said the government was looking into alleged predatory pricing by Walmart-owned Flipkart and Amazon.
In a statement, CAIT claimed that not only e-commerce firms like Amazon and Flipkart, but a large number of companies owning brands, particularly in mobile, FMCG, electronics, electrical appliances, footwear, garments and other sectors, and various banks are also responsible for distortion in prices of different products on online portals.
"It is apparent that these brand owning companies are also exploiting the offline market, being hand in glove with e-commerce companies having separate price policy for both online and offline market, which is a clear violation of the Competition Act," the traders' body said.
It also criticised the banks giving cash back and various types of discounts for purchasing goods from e-commerce portals by making payments through their respective credit/debit cards.
CAIT said the "vicious nexus" of brands, banks and other service providers was creating distortion in the e-commerce market and creating an uneven playing field which runs contrary to both the FDI policy and the Competition Act.