The Indian traders’ body CAIT (Confederation of All India Traders) has accused e-commerce giant Amazon of violating Foreign Direct Investment (FDI) policy and Foreign Exchange Management Act (FEMA) rules. The Jeff Bezos' company has denied the charges.
The powerful traders body has fired off a letter to the Indian Commerce Minister Piyush Goyal, claiming that Amazon India has not got government’s approval for conducting multi-brand retail activities in India.
CAIT said Amazon has invested in retail chains and has been indirectly active in the multi-brand retail segment.
"We have no doubt that if Amazon had complied with the law and sought the prior permission of the Government of India to enter the MBRT (multi-brand retail) sector, such entry, even if allowed, would have been made subject to numerous restrictions tailored to ensure that Amazon is not permitted to engage in monopolistic or anti-competitive activity and grow its business at the cost of the domestic Indian retail sector," the letter said.
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The charge and the refutal
In the letter CAIT secretary-general Praveen Khandelwal further claimed: "Documents available in the public domain show that Amazon has made an investment of about Rs 35,000 crore in Amazon India, a make-believe e-commerce marketplace platform, but in reality indirectly carrying multi-brand retail business,” Confederation of All India Traders (CAIT) secretary-general Praveen Khandelwal said.
CAIT raised the issue of Amazon having invested around Rs 4200 crore in More Retail Limited (a multi-brand retail company). "On the face of it looks like it is controlled by an Alternative Investment Fund (AIF) of Samara Capital, and has an investment of about Rs 1,430 crore in Future Coupons Private Limited, a controlling investment in Future Retail Limited (a multi-brand retail company).”
CAIT said these investments are in violation of FEMA Rules and Regulations, and wanted the government to take quick action against Amazon India.
“The Enforcement Directorate (ED) must take strict action against Amazon for its brazen violations including the imposition of maximum penalties against them”.
An Amazon spokesperson has been quoted by the news agency PTI as saying, “as a responsible investor and a long-term player in India, Amazon complies with FDI laws and seeks regulatory approvals including from the Competition Commission of India (CCI). Our investment in Future and all investments in India are in compliance with applicable regulations.”
CAIT to get even more aggressive
This is not the first time CAIT is taking up cudgels against Amazon and other e-commerce biggies.
Just last month, CAIT, which represents around seven crore traders across the country, wrote to Finance Minister Nirmala Sitharaman seeking a ban on seasonal sales by Amazon and Flipkart over tax loss
Amazon and Flipkart were accused of engaging in predatory pricing during festive sales, “causing huge loss of GST revenue and income tax" to the government.
CAIT has now called a meeting of trade leaders from across the country on Friday via video conferencing on the issue.
The government has said it will not spare any efforts in maintaining a level-playing field in ecommerce.
Earlier this year, CAIT had a soft launch of its own ecommerce portal BharatEMarket. The service, as a pilot program, is available in six cities --- Prayagraj, Gorakhpur, Varanasi, Lucknow, Kanpur and Bengaluru.
BharatEMarket was launched in collaboration with DPIIT (Department for Promotion of Industry and Internal Trade), which of course is a government body.
CAIT is also in solidarity with Future Retail, against which Amazon is in arbitration proceedings.
Amazon is in a legal battle with Future Retail in a bid to thwart the proposed the buyout of the latter by Reliance Retail Ventures.