E-commerce platforms Amazon and Flipkart have once again been accused of violating government policies. The Confederation of All India Traders (CAIT) has called for stern action against the arbitrary attitude and flouting FDI norms by these companies.
CAIT said that e-commerce companies are violating policy and law and many complaints are being made against them, but no action has been taken so far. This is the reason that forced CAIT has started a 40-day campaign across the country from 20th November.
Seeking action under the Foreign Exchange Management Act
CAIT has sent a memorandum to Guruprasad Mohapatra, Secretary, Department for Promotion of Industry and Industrial Trade (DPIIT), complaining against Amazon and Flipkart. CAIT has convicted the company for violations of various rules and offences made under the Foreign Exchange Management Act, 1999 against both Amazon and Flipkart. Also, strict action and punishment are demanded.
De-Facto Control on Indian companies
CAIT national president BC Bhartia and general secretary Praveen Khandelwal said that FDI is not allowed for an ‘Inventory-based model’ of e-commerce, despite these e-commerce companies indirectly controlling Indian companies. One of the major violations by them involves Amazon’s claim of control over Future Retail Limited.
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Besides, Amazon is controlling the More Retail Ltd, a multi-brand retailer. Walmart-owned Flipkart is controlling Aditya Birla Fashion & Retail Ltd, a multi-brand retail company. Flipkart is indirectly controlling sellers or their inventory. He also controls his E-commerce marketplace platform.
Amazon indirectly controls vendors or their inventory on its e-commerce marketplace platform. Amazon Retail Pantry sells multi-brand food products on its e-commerce marketplace platform. Amazon has reportedly invested Rs 35,000 crore intending to capture the Indian e-commerce market, which has become a threat to crores of small traders in India.
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Demand for penalty
In its memorandum that Bhartia and Khandelwal sent to the DPIIT Secretary, CAIT has sought to impose a penalty on Amazon under Section 13 of the Foreign Exchange Management Act, 1999, which is three times the investment, which also comes in violation of FEMA rules. A penalty of Rs 1,20,000 crore has been demanded on Amazon and Rs 3.8 lakh crore on Flipkart.
Retail trade is the lifeline of the Indian economy and provides employment and livelihood to over 25% of the Indian population. Like other countries, the capital dumping of Amazon and Walmart has had the adverse effect on India, where millions of people have become unemployed.
Loss to small and medium traders
Bhartia and Khandelwal said FEMA rules are meant to protect the interests of thousands of small and medium enterprises that cannot possibly stand up against foreign companies due to unlimited resources, which were allowed to go to any country around the world. There they set a record of destroying local industry.
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Both Amazon and Flipkart are operating in an open violation of the Foreign Exchange Management Rules, 2019. But while doing so, they are completely oblivious to the fact that India is not a Banana Republic but is the largest democracy in the world and is a country governed by law. Therefore, they should immediately stop violating Indian law.