Railways and Commerce Minister Piyush Goyal. (PTI)
Railways and Commerce Minister Piyush Goyal. (PTI)

Piyush Goyal warns action against e-commerce companies if found guilty

  • Piyush Goyal said he has recently received some complaints regarding violations by ecommerce companies
  • CAIT has alleged that e-commerce companies are greatly influencing the prices and creating an uneven level playing field

NEW DELHI : Trade minister Piyush Goyal on Thursday said the government will take strictest action against e-commerce companies if they are found to be violating India’s e-commerce policy in “letter or spirit".

“The central government has made clear cut guidelines in e-commerce. We have made it clear that if anybody tries to use the route of multi-brand retail, then strict action will be taken. E-commerce is a marketplace platform. E-commerce companies have no right to discount their products. They have no right to harm small retailers by using the method of predatory pricing," Goyal said in Mumbai answering to a question.

Goyal said he has recently received some complaints regarding violations by ecommerce companies. “Two days ago, commerce ministry had sent a questionnaire seeking information. Another supplementary questionnaire is also being sent. After the full details are received, whatever action is required will be taken. If law has been violated in any manner, letter or spirit, strictest action will be taken. Bharatiya Janata Party, the Narendra Modi government is very clear that we stand with the small retailers across the country. We will care for them and will not allow anybody to harm them," he added.

Replying to a query from Mint, a Flipkart spokesperson said Flipkart is fully compliant with all laws of the country including FDI regulations. “We have always been fully committed to doing business the right way and appreciate the consultative approach that the Commerce Ministry & DPIIT have taken. We continue to be willing to work with the government & all stakeholders to promote a regulatory environment that creates balanced growth that is good for India. We are proud to be supporting job growth in India, supporting sellers, MSMEs, artisans and working with logistics partners including thousands of kiranas & general trade stores," the spokesperson added.

After complaints from brick and mortar retailers alleging predatory pricing and deep discounting by the e-commerce companies during their ongoing festive sales, senior officials of the Department for Promotion of Industry and Internal Trade (DPIIT) last week met representatives of Amazon and Flipkart.

Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal had alleged that e-commerce companies are following unethical business models and violating foreign direct investment norms.

In a statement issued last week, CAIT said a delegation of traders led by Khandelwal met trade minister Goyal who in turn assured that if unethical business practices are proven, government may order an investigation.

CAIT has alleged that e-commerce companies are greatly influencing the prices and creating an uneven level playing field, which is strictly prohibited under the FDI policy. “The policy is being flouted over the years right under the nose of the government but so far no action has been taken against them. These e-commerce companies are snatching the business of offline traders by unethical business practices," CAIT said in a statement.

The Federation of All India Vyapar Mandal, another body of offline traders also said in a statement last week that they made a similar complain to Goyal on 3 October. It alleged that e-commerce companies are also offering installments to attract more and more customers, due to which the traditional retail market and business are being adversely affected.

In February, India’s new investment rules for the e-commerce sector jolted Amazon Inc and Walmart’s Flipkart as the companies were forced to change their business structures to continue to operate in the country. The rules were aimed at protecting India’s brick-and-mortar retailers by deterring big online retailers from giving steep discounts to attract shoppers.

Goyal, earlier this month, defended India’s decision by reiterating that the government cannot let “small traders die" and that he had urged e-commerce companies to follow all the rules. “E-commerce is a platform that provides opportunity to buyers and sellers in an agnostic fashion. It is not expected to be a platform for predatory pricing," he said speaking at the India Economic Summit organized by the World Economic Forum.

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