The Confederation of All India Traders (CAIT) urged the Commerce and Industry Ministry not to allow private labels to be sold on e-commerce marketplaces and desist from extending the Feb. 1 deadline for implementation of the changes to FDI policy for the e-commerce sector.
In a letter to Ramesh Abhishek, secretary in the Department of Industrial Policy and Promotion, the CAIT requested him to make it explicitly clear whether private labelling or branding is allowed under the foreign direct investment policy in the e-commerce sector.
“It is submitted that if it (labelling) is allowed it will run contrary to the intention of the government to make e-commerce free from evils and malpractice and to provide an equal level-playing field with fair competition.
“Such e-commerce companies will continue their ulterior motives through such loopholes as they are doing since last many years and small retailers will be killed,” CAIT alleged.
A delegation of CAIT called on Commerce Minister Suresh Prabhu Thursday apprising him of the situation.
CAIT Secretary General Praveen Khandelwal said that it will “strongly and stoutly” oppose any move to change the policy to the advantage of major e-commerce players.
“We strongly oppose such tactics and method of coercion and remain as a strong support to the government in its bid to clean the e-commerce market from unfair and unethical business practices,” CAIT said in a letter to Commerce Minister, PTI reported.
Khandelwal added that the minister assured them of a level playing field for all traders.
However, retail experts have doubted over restriction of discounts by the government. “How will you decide on which product, let’s say, a 10% discount is normal but 20% is more or 5% is too less and 15% is too much. Monitoring that for millions of products listed online is quite impossible,” consulting firm Wazir Advisors founder and MD Harminder Sahni told FE Online last month.
The only way you can control discounts, according to Sahni, is to get a minimum retail price for every product so that online retailers cannot sell below that price after discounts.
Large e-commerce marketplaces could approach the government seeking extension of the Feb. 1 deadline as compliance with the recent changes would require at least four to five months at operational level, multiple sources said earlier.
However, in the letter to the DIPP secretary, CAIT said it will strongly oppose any such extension.
“The modus operandi of these e-commerce companies for seeking extension is to keep delaying fair execution of the policy and they may continue with their sinister designs of operating all kinds of malpractices,” it said.
“Therefore, it is strongly submitted not to fall prey under malicious agenda of such e-commerce companies and no extension should be allowed under any circumstances,” the traders’ body claimed.
The government’s move to tighten norms has hit Amazon and Flipkart the hardest as the new regulations bar online marketplaces with foreign investment to sell products of companies where they hold stakes as well as ban exclusive marketing arrangements.
Another provision states that the inventory of a vendor will be seen as controlled by a marketplace, if over 25 percent of the vendor’s purchases are from the marketplace entity, including the latter’s wholesale unit.
The move is aimed at ensuring that the marketplace entity or its related companies cannot control inventory under the FDI rules.