India’s retailers refuse to be mute spectators as Amazon, Paytm and Flipkart allegedly violate the online marketplace model

As per The Retailers Association of India, which is India’s top retailers' lobby, there has been an alleged violation of the online 'marketplace' model by e-tailers like Amazon, Paytm and Flipkart, which is why it will soon seek an Enforcement Directorate (ED) probe.

As per the association, discounts offered by these online sellers influence the pricing of goods, hence violating the online marketplace model.

DIPP had issued a press note on March 29, in which it had described a marketplace-based model of e-commerce as the one providing an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between the buyer and the seller.

"We are asking for an early investigation by the ED into the matter and we are going to take up this matter with the finance minister soon," Kumar Rajagopalan, chief executive officer at the association, told ET.

The retailers' lobby has already approached DIPP and has complained about these e-commerce companies engaging in B2C trade by selling their own brands, which breaches the FDI rules.

As per the rules, 100% FDI is allowed under the automatic route in B2B e-commerce but B2C e-commerce can’t have any FDI. "You cannot call yourself a marketplace to qualify for 100% FDI and then indulge in retail business. Some action has to be taken in this matter," Rajagopalan said.

However, DIPP could only draft the FDI policy, and all violations have to be under the purview of regulatory agencies like ED, which is why it has been approached for timely action.

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