• Retailers seek ED probe into alleged violation of online marketplace model by Amazon, Paytm and Flipkart

    The country’s top retailers’ lobby said it will soon seek an Enforcement Directorate (ED) probe into the alleged violation of the online ‘marketplace’ model by e-tailers like Amazon, Paytm and Flipkart.

    The Retailers Association of India said online sellers are offering discounts that influence the pricing of goods, which is a violation of the model.

    According to a press note issued on March 29 by the Department of Industrial Policy and Promotion (DIPP), a marketplace-based model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between the buyer and the seller.

    “We are asking for an early investigation by the ED into the matter and we are going to take up this matter with the finance minister soon,” Kumar Rajagopalan, chief executive officer at the association, told ET.

    The retailers’ lobby had recently approached DIPP saying that e-commerce companies were engaging in business-to-consumer trade by selling their own brands and, thus, flouting the FDI rules. The government has allowed 100% FDI under the automatic route in business-to-business e-commerce but no FDI is permitted in business-to-consumer e-commerce. “You cannot call yourself a marketplace to qualify for 100% FDI and then indulge in retail business. Some action has to be taken in this matter,” Rajagopalan said.

    DIPP, though, has the mandate to only draft the FDI policy and any alleged violation of the policy comes under the purview of regulatory agencies such as the Enforcement Directorate.

    Earlier, the All India Footwear Manufacturers and Retailers Association had also dragged the ecommerce companies to court over this matter. The delhi High Court had then asked DIPP to clarify the e-commerce policy and to put in place a clear definition for the marketplace model.

    By restricting online portals from influencing the prices, the government wants to protect the small and medium enterprises from deep online discounting. The March 29 DIPP press note clarified that an e-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, call centre and payment collection under B2B e-commerce. Ben Gedeon Authentic Jersey

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