Commerce and industry minister Piyush Goyal on Wednesday said the government is examining representations regarding allegations about some ecommerce companies engaging in predatory pricing and excessive discounts.
“Representations have been received in this department (DPIIT) alleging that some ecommerce platforms are engaged in predatory pricing and are providing excessive discounts….These representations are under examination,” Goyal said in reply to a question in the Lok Sabha.
The current foreign direct investment (FDI) policy on ecommerce sector specifies that companies operating marketplace model business in the sector will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field, he said.
Goyal said that ecommerce companies having foreign investment can operate only a marketplace model and there are restrictions on the inventory-based model of ecommerce.
As per norms, overseas-funded ecommerce marketplaces can’t engage in retailing goods themselves, and can only function as platforms for buyers and sellers. Small shopkeepers accuse Amazon and Walmart-owned Flipkart of flouting rules and driving them out of business through predatory discounts. This has prompted the government to tighten rules and increase oversight.
The Competition Commission of India (CCI) recently ordered a probe against Amazon and Flipkart for alleged malpractices, including deep discounting and tieups with preferred sellers on their platforms.
The government has made it mandatory for ecommerce companies like Amazon and Flipkart to get and maintain annual reports by statutory auditors on compliance with FDI rules by September 30 every year.
Replying to a separate question, the minister said data is not centrally maintained for assessing the impact of FDI on employment generation. “FDI inflows serve to augment domestic capital and help to promote industrial development and employment generation across sectors,” he said. In reply to another question in the House, Goyal said there were seven instances of illegal export of minerals.
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