Post FDI, retailers call for level playing field in eCommerce

Observing adamant stand from the eCommerce players in complying with the recent FDI clarification, leading retailers of the country call for level playing field with immediate enforcement of law.
Retailers frustated over voilation of FDI

Observing adamant stand from the eCommerce players in complying with the recent FDI clarification, leading retailers of the country call for level playing field with immediate enforcement of law.

The Non compliance of online marketplaces with consent of the government’s recent clear policy direction on FDI in eCommerce has compelled the offline retailers to pull-up their sleeves. Leading retailers of the Country like Shoppers Stop, Future Group, The Mobile Store, Aditya Birla Group, Future Retail along with Retailers Association of India have come together to protest the move, while welcoming the clarification on several important aspects of FDI in eCommerce. 

These retailers are contending that many eCommerce players in the country, including Flipkart, Snapdeal, Amazon among others have been accessing foreign funds while behaving like quasi retailers and flouting the FDI rules incessantly. It’s high time that the eCommerce retailers should adhere to the laws of the land for which government should put its enforcement machinery into action.

“These eCommerce companies function because of the foreign money. Amazon is talking of ‘Apni dukaan’, where is dukaan in the marketplace? How can they call themselves a retailer? Inventory based eCommerce Company Big Basket has raised foreign money. It has no suppliers onboard and has been selling its own brand, which is completely in contravention with the government’s policy direction on allowing 100 percent foreign investment in online marketplace platform. I feel Big Basket should shut down,” said Kishore Biyani, Group CEO, Future Group.

“Ecommerce companies are still continuing the discounts. They have created their own wallets from which they offer money back discounts and it is complete violation of the policy, which also bars them from offering any kind of direct or indirect discounts”, said Alok Gupta, CEO, The Mobile Store.

Rahul Mehta, President, CMAI said, “Is the legalities been followed? Every eCommerce company has its own brand. How can they claim that they are the marketplace? There is very clear violation of the spirit of law.”

The FDI norms were meant to be applicable from the day of clarification. But, it has not been followed by the eCommerce companies, even after the two weeks of time which is leading to fierce demand for level playing field by the offline retailers. It accounts for 95 percent of the total retail sale of the country.

“These online marketplace companies which call themselves facilitator of the platform for buyers and sellers should not be directly communicating with the buyers because that is the right of the seller selling on their platform. The level playing field will not be created unless the spirit of the policy is fully implemented”, said Rakesh Biyani, Joint MD, Future Retail Ltd.

“Recently Gujarat came up with eCommerce based taxations. These taxations are coming because there is not enough revenue generation for the states, so there is certain set of violation happening that needs to stop”, added Rakesh Biyani

Retailers Association of India (RAI) which brought these retailers on a common platform has welcomed the new FDI policy guidelines. To ensure enforcement of these guidelines, it has submitted a collective note to DIPP.

“Government wants to ensure a level playing field for all channels. The clarification has ensured that marketplaces, if run in the right spirit, could complement retailers by acting like malls online. Retailers would be happy to collaborate with them in the same way as they have collaborated with malls so far,” said Kumar Rajagopalan, CEO, RAI.

According to B S Nagesh, Chairman, RAI, there are 10 retail models in the country which needs to be clearly defined by the govt. These models include single brand retail, multi brand retail, food, non- food, online, offline, inventory model, marketplace mode, B2B and B2c.

There is a larger chunk of offline retail industry which is not funded by the FDI. It is the responsibility of the government to strongly maintain equality amid the spirit of the policy for everybody and stating that the violation of it is not good for the industry and the country. But, unfortunately when it comes to implementation, there is only one agency that is Enforcement Directorate at the centre responsible for the enforcement of the law.

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