The Indian government appears to be telling the major online retail players in the country to explore the ways in which they can carry kirana stores along in their scheme of things. This is the message reportedly conveyed by the Union Commerce Minister Piyush Goyal when he met with Amit Agarwal, Head, Amazon India on Tuesday.
Separately, the nodal agency that works under his ministry, the Department for Promotion of Industry and Internal Trade (DPIIT), has also addressed a communication to e-commerce companies on the same subject. There’s even a move to bring out a policy on this, it is reported.
The genesis of this issue goes back to the relentless battle that trade body Confederation of All India Traders (CAIT) has been waging against the likes of Amazon and Flipkart for their deep discounting practices. They have been joined by the mobile phones retailing association, All India Mobile Retailers Association (AIMRA). The key issues they have been raising is that these companies are defying FDI rules and are indirectly involved in selling products on their platform and the deep discounts offered by them are losses they absorb on their books.
On this, the DPIIT and government say they wish to understand the accounting practices followed by Amazon and have asked the ecommerce players to share the details of the top sellers on their platforms and the tax-related information. That may be the way the government wants to lower the heat as far as the local trade bodies are concerned.
The top ecommerce firms Flipkart and Amazon had recorded some great sales on their platforms. This had helped the government dispel the charge that the economy is sluggish.
While the DPIIT will continue with the exercises to investigate the complaints made by CAIT and AIMRA, it wants to see if there are ways the small retailers can be integrated into this success story of the ecommerce firms. The mail sent by DPIIT is addressed to several of the players, Flipkart, Amazon, Snapdeal, Zomato, Swiggy and Big Basket apart from others.
Flipkart and Walmart have maintained that they are not violating any of the FDI norms and that whatever discounts are offered on their platforms are at the instance of the respective brands. The retailers have said they will take it up with the brands since they don’t enjoy the same levels of discounts, denying them a level playing field.