Get All Access for $5/mo

Everything You Need To Know About Flipkart's and Amazon's Tussle With Traders The tussle between e-commerce companies and the traders associations has taken a new turn after it alleged that through deep discounting, Flipkart and Amazon were going against tax regulations

By Debroop Roy

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Shutterstock

The tussle between e-commerce companies such as Flipkart and Amazon, and the traders associations of India continues unabated. On Sunday, the Confederation of All India Traders (CAIT) sent a letter to finance minister Nirmala Sitharaman asking her to address the concerns around deep discounting and potential tax avoidance.

Both Amazon and Flipkart have "designed their business model based on highly predatory pricing and deep discounting and charging GST (goods and service tax) on artificially lowered price", reads the letter from Praveen Khandelwal, secretary general at CAIT.

Khandelwal adds that as per regulations, companies must charge GST on actual market value of a product rather than the discounted price.

Amazon and Flipkart did not respond to requests for comment at the time of publication.

What Has Happened So Far

In September, CAIT sent a letter to Piyush Goyal, the minister of commerce and industry, stating that e-commerce marketplaces were offering deep discounts during the festive season sales, which was against the foreign direct investment (FDI) policy and was hurting local vendors.

It also said that these companies had turned to inventory-based models, reportedly a violation of FDI policy.

About a month later, representatives of the traders' body met Goyal to discuss their problems. The government then summoned the companies, and said it intends to create a level-playing field for everyone. No predatory pricing or deep discounting policies would be allowed, Goyal said.

While both Flipkart and Amazon denied the allegations at a meeting held by the Department for Promotion of Industry and Internal Trade (DPIIT), the CAIT reportedly showed e-mails sent by the platforms to sellers, asking them for shared-models for discounting.

A few days later, CAIT brought forward similar claims again, but this time, both the companies said the discounts offered were from the brands themselves, not the platforms.

In late October, DPIIT asked Amazon and Flipkart for a list of their top five sellers with details such as business done, investments and commission agreements.

What Does The CAIT Want?

Among the major demands, CAIT wants a strict policy around discounts that e-commerce platforms can offer, something that often takes people away from brick-and-mortar stores, which cannot afford similar discounts.

Khandelwal, while requesting Sitharaman to conduct enquiries around the issues, also asked that a delegation of the CAIT be allowed to give a detailed presentation on the matter, along with relevant evidence.

Debroop Roy

Former Correspondent

Covering the start-up ecosystem in and around Bangalore. Formerly an energy reporter at Reuters. A film, cricket buff who also writes fiction on weekends.
Entrepreneurs

Academic Excellence Is Not Necessary for Success in Life: Hear from the Founder of this Exciting New Digital Education Platform.

Many educational platforms are emerging these days to help people qualify for various types of entrance examinations. But what about the students who don't want to take the traditional path, the ones who don't rank among the top 10 in the classroom yet still aim high in life?

Growing a Business

3 Branding Strategies That Will Make Any Brand Stand Out

Here's how to differentiate your brand in three essential steps — understanding your unique selling proposition, leveraging storytelling, and valuing feedback.

Science & Technology

No More ChatGPT? Here's Why Small Language Models Are Stealing the AI Spotlight

Entrepreneurs can leverage this growing tech to create innovative, efficient and targeted AI solutions.

Growing a Business

The Top 5 AI Tools That Can Revolutionize Your Workflow and Boost Productivity

Discover the top 5 AI tools for marketing and content creation that every marketer needs to know.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.