India’s three best known brands in e-commerce have come under fire from CAIT (Confederation of All India Traders) for violating the forms prescribed for FDI related entities in the company. According to the CAIT, Flipkart, Amazon, and Snapdeal have contravened the government’s FDI policy, which prevents securing investments from abroad in entities working on an inventory based model in the area, and a complaint has been made with the DIPP. One may even recall that in March this year, the government had allowed e-commerce entities to avail 100 per cent FDI.
According to the complaint by CAIT, the companies had also violated norms by advertising on a large scale about sales on their respective platforms, which is a contravention of the FDI guidelines issued for ecommerce entities. Other than that, the companies are legally allowed to conduct B2B business in India, but they have been directly involved with B2C transactions in the country. According to the TOI, when the companies were contacted they declined or did not respond to queries through email.
CAIT is determined on taking the case more seriously. They have sought an appointment with Commerce & Industry Minister, Nirmala Sitaraman. They have even asked the ministry to ‘take immediate action against these 3 companies which are habitual in contravening the policy’.
While the CAIT takes its fight against the ecommerce giants to the highest authorities, their presence in the industry is indeed a positive picture. In June, a report by Nielsen revealed that these companies have the highest brand equity in the country currently. According to the statement from Nielsen, Amazon was first, followed by Flipkart at second, and Snapdeal at third, for having the highest branding equity amongst e-tailing websites. However, with the latest development, what remains to be seen is, in which way and by how much will the brand equity get affected, if there are any steps taken against the companies.