FlipKart and Amazon Under Supervision for Violation of the FDI Rules


A group of companies operating in brick-and-mortar stores has joined together to raise a voice against the violation of India’s foreign investment regulations. The charges on these mega online marketplaces is that of unjustified influence on the pricing of certain products through unusual discounts and offers. The major complainers include the Future Group and the Reliance Retail.

Very recently, a few small sellers, as well as mobile handset manufacturers, had also raised similar concern again Amazon and Flipkart who offer highly lucrative discounts to the online shoppers and reduce the prices of products to unacceptable levels. This voice gets a new pitch with the new group of companies who are now asking for the similar explanations from these marketplaces.

However, these foreign-funded marketplaces like Amazon, SnapDeal, Flipkart and ShopClues have already given an explanation throwing light on the regulations spelt out for such operators which states that the 100% foreign investment they get is only to support these platform with their choice of discount models so that vendors and retailers can conduct profitable business on their platform.

E-commerce and industry minister, Suresh Prabhu has also received the letter from small vendors and Indian Cellular Association which comprises of a group of handset makers like Micromax, Apple, Nokia, Vivo, Lava, and Lenovo. The letter urges the minister to look into the matter and take some action the online platforms that violate the FDI norms by offering ingenuine discounts on mobile phones and other products. To this, the Flipkart spokesperson has reacted with the statement, “We conduct our business with highest standards of integrity and in compliance with applicable laws,”
“All sales, including sales of private label products, on the platform are undertaken by sellers who are listed on the platform.”

Amazon has also claimed that the platform is a third-party marketplace operating in compliance with all the applicable laws. These alleged violations have been targeted since long and retailers have been fighting against it since 2015 when a petition was filed in Delhi high count which led to the formulation of FDI policy.

In 2016, the Press Note 3 was released which stated that marketplaces should desist from influencing the prices of products on the platform which has largely been altered as observed.