The 16 companies include Amazon, Flipkart, Paytm, OYO, BigBasket, Swiggy, Zomato, Ola, MakeMyTrip, Medlife, among others.

All-India traders body writes to Piyush Goyal seeks probe into 16 online companies
Atom E-commerce Saturday, January 25, 2020 - 15:42

In yet another move in their agitation against e-commerce players, traders, led by the Confederation of All India Traders (CAIT), have written to Union Commerce Minister Piyush Goyal, seeking a probe into 16 companies across e-commerce, transport, travel, food, medical and other verticals.

The 16 companies include Amazon, Flipkart, Paytm, OYO, BigBasket, Swiggy, Zomato, Ola, MakeMyTrip, Medlife, among others.

CAIT wants the government to investigate their business module, foreign investments and its disbursal, GST and Income tax evasion and probabilities of cash burn.

“Therefore, in the best interest of the trade and commerce, consumers and economy of the country, such kind of business activities need an immediate investigation by the Government. It is also to be seen that in spite of making huge losses every year, how these companies are able to continue with their business activities and offering predatory pricing and deep discounting,” CAIT wrote in the letter.

It also urged the minister to roll out an e-commerce policy and set up either a regulatory authority or an e-commerce ombudsman for the e-commerce industry.

“We would like to clarify that traders of the country are not against e-commerce but are connecting themselves with e-commerce under the digitization campaign being run by CAIT,” it added.

They pointed out in the letter that these companies have been incurring heavy losses, which in many cases is much higher than their revenues.  

As per numbers provided in the letter, CAIT claims that according to the financial year 2019 figures, Amazon clocked an annual revenue of Rs 7,593 crore, while incurring an annual loss of Rs 5,685 crore.

“Similarly the annual revenue of Flipkart is 4,234 crore, while the loss is Rs 1,625 crore, Paytm’s revenue is 968 crore and loss Rs 1171 crore, OYO’s revenue is Rs 6457 crore and loss 2385 crore… Apart from these, the annual loss of e-commerce companies working in all other areas is more than their annual revenue. It is astonishing that despite the huge losses, these companies are also doing business continuously,” CAIT general secretary Praveen Khandelwal said.

This comes ahead of the traders conference to be organised by CAIT in New Delhi on January 27, where Piyush Goyal will interact with the traders and trade leaders from about 12 states.

Traders have been locked in a battle with e-commerce players for over two years now over predatory pricing, deep discounting and flouting of FDI norms. They have approached the government on various occasions seeking action against e-commerce companies, especially Flipkart and Amazon.

The battle veered in their favour when the Competition Commission of India (CCI) ordered a probe into the discounting practices, preferential treatment of certain sellers and exclusive brand launches by Flipkart and Amazon.

Read: CCI orders probe against Amazon, Flipkart over deep discounts, preferential listing

In fact, Piyush Goyal too, has spoken in favour of traders. During Jeff Bezos’ visit to India earlier this month, Goyal said at a Raisina Dialogue in Delhi that Amazon is not doing India a favour by investing one billion dollars.

"They (Amazon) may have put in a billion dollars but if they make a loss of a billion dollars every year, then jolly well will have to finance that billion dollars. So, it is not as if they are doing a favour to India when they invest a billion dollars," he said at the time.

The minister also wondered why an e-commerce marketplace model, where a firm provides an IT platform for buyers and sellers, was incurring huge losses, adding that it needs to be looked upon.

"They are investing money over the last few years also in warehousing and certain other activities, which is welcome and good. But if they are bringing in money largely to finance losses and in a fair e-commerce marketplace model with a turnover of $10 billion dollars, if a company is incurring loss of billion dollars, it certainly raises questions, where the loss came from,” Goyal said.

However, he later clarified that his statement was misconstrued and that the government welcomes all investments with regulations.

“Our government has allowed e-commerce entities to come to India under the marketplace model. As long as everyone follows the rules, we welcome e-commerce in India, and they are happy to trade and serve the people of India. I have on more than one occasion, said this to the people of India and to all investors, that to please follow the letter of the law and the spirit of the law. Don't try to find loopholes when clearly, we have articulated what the e-commerce model is,” he said in a series of tweets on January 16.

Also read: Piyush Goyal’s jibe at Amazon didn’t bode well with India Inc, here’s why