Confederation of All India Traders (CAIT) seeks blanket ban on Flipkart, Amazon festive season sales

Soon after Flipkart has announced the dates of its “The Big Billion Days” sale, the Confederation of All India Traders (CAIT) has written to the government seeking a “blanket ban” on festive season sales conducted by Flipkart as well as its rival Amazon and other such platforms saying that their deep discounts violate the country's foreign investment rules for online retail.

The two e-commerce giants hold annual festive season sales ahead of major festivals such as Dussehra and Diwali which is when most of the Indians make big purchases. During the festive season, both the e-commerce portals promise big discounts on everything from fashion to smartphones to home appliances and have earlier said that discounts and deals are offered by sellers on their platforms.

“By offering deep discounts ranging from 10 per cent to 80 per cent on their e-commerce portals, these companies are clearly influencing the prices and create an uneven level playing field which is in direct contravention of the policy,” the Confederation of All India Traders (CAIT) said in a letter to Commerce and Industry Minister Piyush Goyal.

According to the traders body, these e-commerce platforms are “openly flouting Foreign Direct Investment (FDI) norms, and a blanket ban on such festival sales should be ordered and an investigation should be conducted as to the potential violation of FDI norms and accordingly action should be taken against them.”

The CAIT, which represents around 5 lakh merchants and traders across the country, also demanded a “blanket ban” on such sales and asked the Government to probe the potential violation of Foreign Direct Investment (FDI) norms.

India does not allow FDI in inventory-driven models of e-commerce, used by Walmart and Amazon in the United States, where goods and services are owned by an e-commerce firm that sells directly to retail customers. The FDI modified e-commerce rules late in 2018 to protect the country’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.

According to Flipkart, it empowers its sellers with business insights that allows them to decide the best value for their own products, so they can deliver benefits and savings to consumers and scale their businesses at the same time.

Amazon said over 5 lakh sellers - a bulk of which are small businesses, women entrepreneurs, startups, weavers and artisans - use the festive sale to reach out to customers. According to Amazon, the sellers decide the pricing for their products on the marketplace. The sellers offered their choice of selection to their customers across the country at prices that they deemed fit.