Asking e-commerce players to strictly follow FDI norms, Commerce and Industry Minister Piyush Goyal on Thursday said that it “certainly does not look and feel and smell right” when a company incurs a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore.
Goyal stressed that there would be no need for his ministry or the Competition Commission of India (CCI) to probe fair trade practices if e-commerce players “can stick within the letter and spirit of the law”. He was speaking at the Times Now Summit in New Delhi.
This comes after the minister had earlier stated that Amazon was not doing India a favour by announcing $1 million investment in the country and questioned how the e-tailer could incur substantial losses but for its predatory pricing.
The minister who was responding on whether Amazon was violating any domestic rules of the country, said that India would welcome e-commerce companies as long as they operate within the framework of laws of the land.
Stating that he had the CCI’s preliminary findings, the minister said, “Our own office is also making queries on the various practices and I do hope and believe that if everybody can stick within the letter and spirit of the law, we won't have to go down the path of finding whether anybody is breaking the law or not but whoever makes losses will have to bring in FDI to pay for those losses.”
Asserting that it’s the government’s duty to protect the interests of the smallest stakeholders in the sector, the minister said that a small number of people benefitting from e-commerce may seem attractive but it cannot be at the cost of a ‘10X’ number of people facing the consequences of illegal practices. He also termed it as extremely unfair competition if a trillion dollar company is vying with small retailers whose total capital may be a lakh or two lakh rupees.
The government allowed FDI in e-commerce for marketplace model, where a firm is required to work as an agnostic platform by allowing buyers and sellers the opportunity to transact on the platform, he stated.
The minister added that the platform cannot have a chosen supplier, cannot determine the pricing, and cannot have control on the inventory.
"Very clearly a platform which has to be agnostic and encourage buyers and sellers to participate in a fair trade, cannot make a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore," he said.
The e-commerce policy strictly has allowed only business-to-business transaction and online retailers were never expected to be "let's say a hidden way or a surreptitious way to enter multi-brand retailing,” the minister emphasised.
With PTI inputs