Retailers such as Future Group and Reliance accused the e-commerce companies for violating the country’s Foreign Investment Regulations by influencing the prices of the products and misrepresenting huge discount. RAI has demanded action against e-commerce companies.
RAI has written in a letter to Commerce and Industry Minister Suresh Prabhu alleging that e-commerce companies have discovered ways to avoid rules that prohibit such business models. In addition to the American e-commerce company Amazon, apart from foreign funding, India’s e-commerce companies like Flipkart, Snapdeal, and Shopclues, run on the marketplace model, which allows for 100% foreign investment. But in such a model, these companies are prohibited from selling their own products and give their platforms for business to retailers and vendors.
Earlier, an organization of small vendors selling on e-commerce, along with the Indian Cellular Association (ICA), an organization of companies producing handsets, wrote a letter to Prabhu about the violation of Foreign Direct Investment (FDI) norms by Amazon and Flipkart. The letter stated that these companies are violating norms by giving discounts on phones and other products through partner and intermediaries companies. Indian Cellular Association members include companies that make mobile handsets such as Apple, Micromax, Nokia, Vivo, Lava, and Lenovo.
RAI has also raised voice against the wrong methods of e-commerce companies doing business earlier. In 2015, it filed a petition in the Delhi High Court against such violations. After this, the government had to take an FDI policy for e-commerce companies. RAI says that FDI policy is prohibited from direct or indirect involvement in pricing on these companies, but these companies are also selling their brand’s private labels through the website, with effect on the selling price of the products.
Retail companies say that this is affecting their sales. Retailers also say that there is no equal business environment between them and e-commerce companies, as there is no bar on foreign investment for e-commerce companies, while many difficulties are faced by retail companies.