CAIT urges govt not to make changes to FDI norms, probe e-comm firms’ biz

Traders' body CAIT on Wednesday urged the government not to accede to any demand by large e-commerce players or US associations for changes or delayed implementation of revised FDI norms for e-commerce alleging that these firms are lobbying hard and its time government should probe their business. CAIT will launch a nation-wide protest if the government accedes to the e-commerce player’s demand to change or delay the implementation of revised FDI norms for e-commerce.

The deadline for implementation of the policy is February 1, 2019. “As a body that represents seven crore small businesses in the country and 40,000 trade federation, we strongly oppose any changes. To accede to their demand is not good for the trading community,” Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal said. He said, “We want the government to institute a thorough probe in the business activities of these players in the last 2-3 years. They should be strictly penalised if any violation found.”

It also demanded that the government should make it mandatory for the e-commerce companies to obtain a compliance certificate as on March 3, 2019 and the companies that do not have the certificate should be restricted to operate their ecommerce portal any more. CAIT warned that any move to amend the policy will be opposed by the trading community "tooth and nail".

Tightening norms for ecommerce firms having foreign investment, the government has barred online marketplaces such as Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price.  "We want the government to institute a probe into the business activities of major e-commerce players over the last two-three years. Those found violating the policy should be strongly punished," Khandelwal said.

The government's new regulations bar online marketplaces with foreign investment to sell products of companies in which they hold stake 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 per cent of the vendor's purchases are from the marketplace entity, including the latter's wholesale unit. Some large online marketplaces have favoured an extension of the February 1 deadline for the new and tighter rules.

This comes at the back of reports that the major online retailers have approached the government seeking extension in the implementation of FDI norms. The revised FDI norms state that the e-commerce players cannot sell products from companies they have stake in. Also, e-commerce companies with foreign funds have to compulsorily operate as a marketplace and not an inventory model. For instance, Amazon holds stakes in Cloudtail India and Appario Retail and will not be able to sell their wares.

On Tuesday, the Internet and Mobile Association of India (IAMAI) urged the government to defer the implementation of revised norms for e-commerce companies having foreign investments, as few provisions are unclear and onerous. IAMAI argued that it would not be possible for online retailers to comply with the norm related to 25 per cent cap.