Flipkart and Snapdeal have one thing in common, but that’s irking the Govt!

After failing to get a response from the central government over foreign direct investment (FDI) norms with e-Commerce players in India, brick-and-mortar retailers are going to approach the Delhi High Court once again.

"We did meet the government once and nothing happened after that. We will have to take a call as a group," said Kishore Biyani, founder of Future Group, India's largest network of retail store chains. He said there should be clarity in the policy.

In their quest for parity in FDI norms with e-Commerce firms, which have attracted billions of dollars in overseas funding using the marketplace model, traditional retailers had already approached the court in May.

They contend that while India bars FDI in e-Commerce firms that sell products directly to consumers, foreign companies are allowed to operate online marketplaces that offer a platform for sale of global brands, putting them at a disadvantage.

India allows 51% FDI in multi-brand retailing, with a whole host of conditions including 30% mandatory local sourcing and $100 million upfront investment. "We will wait for another few days but if it (the government) still doesn't get a clarified policy, we will have no other option than to go for legal recourse," said Kumar Rajagopalan, chief executive of the Retailers Association of India.

RAI, an industry body representing over 1,000 retailers, including Shoppers Stop, Reliance Retail and the Future Group, filed a petition against the government in mid-May asking for a level playing field in terms of foreign investment.

On May 21, the Delhi High Court converted the petition into a representation, directing the association to discuss the matter with the government, failing which they could approach the court again within four months. Since then, associations of mobile and footwear sellers have also filed similar petitions alleging FDI violations.

Biyani had earlier said that India's physical retailers and the marketplace model operated by foreign funded e-Commerce companies in India are largely similar — the only difference is the process of smart accounting by online retailers. He also said ecommerce companies are violating FDI laws "in the spirit and letter".

Retailers say they will push the case in the Delhi court, once again highlighting how e-Commerce companies are allegedly circumventing India's FDI regulations. "e-Commerce is only supposed to translate the physical world into the Internet world and therefore deserves to be similarly regulated as commerce in the physical world," said Rajagopalan.

"Though the outcome of ecommerce and retail in the physical world is the same, the treatment meted out by the government of India to the two retail segments in the same market is inequitable," he added.

(Image: Indiatimes)