Sale Days: Bone of Contention Between E-Commerce Companies and Small Traders
Amazon and Flipkart issued warning over steep discounts, not in compliance with FDI norms
Flipkart and Amazon are back with their prime sale days and with amazing discounts. Customers look forward to the discounted prices of these e- commerce firms. The government has issued warning to flipkart and amazon over the steep discounts offered by them in the sale days. Commerce minister Piyush Goyal expressed his concerns over the discounts as it harms the business of small time retailers. From February 1government imposed new foreign direct investment(FDI) rules to protect the small time retailers from this predatory behavior of foreign funded companies like amazon and flipkart.
Strict Adherence to Rules
Mr Goyal had been meeting different stakeholders of commerce companies to address this issue. According to media reports, in a recently held a meeting with representatives of amazon, flipkart among others minister made it clear that strict adherence to the FDI policies should be followed as it was notified in December to them as well. It was also reported that companies claimed to be in compliance with the FDI laws and were not violating any norms since it came into effect from February 1st this year. Mr Goyal defended the government's new policy and said government will not tolerate e- commerce practices of discounting prices to affect small shopkeepers. The representatives of both the flipkart and amazon welcomed the move and said they are committed to and support the initiatives of government.
Protecting Small Traders
As per the media reports, commerce minister said in a statement that they are committed towards the welfare of small traders and ensure their business thrives. India imposed new FDI rules on February 1 to help thousands of small traders in the country. According to these traders the big companies use their control over inventory from affiliated vendors to generate an unfair market place with steep discounts. Government is trying to protect local traders from " threats' they face from large foreign based firms.
Concerns Over E-commerce and Trade
Government's new policy raised concerns from foreign based firms. US government and American based firms have also voiced concerns on the several recent Indian policies. Also other than stricter e-commerce rules, companies also have to store their data locally. As per reports, commerce minister Piyush Goyal has been attending meetings with various foreign and Indian e-commerce firms to iron out policy issues. He also said that they have set a grievance committee to hear issues related to FDI in e-commerce.
Firms like amazon and flipkart are concerned because they were able to build their customer base in the country by offering products at a cheaper price than they are available in the market. There is US- India trade relationship issue as well which needs to be treated with caution. US secretary Mike Pompeo is visiting India currently and has expressed concerns over the change in policies affecting the US firms like amazon and flipkart which was acquired by walmart last year. It is yet to be seen how this whole issue will pan out in the coming days.