CAIT urges DPIIT to penalise Amazon, Flipkart

CAIT also told DPIIT that Amazon indirectly invested around Rs 4,200 crore and took over control of More Retail Limited

New Delhi: The Confederation of All India Traders (CAIT) has written to the Department for Promotion of Industry and Internal Trade (DPIIT) to take action against e-commerce major Amazon and Flipkart for alleged violation of FDI and FEMA norms. In a letter to the DPIIT Secretary, Guruprasad Mohapatra, the traders’ body said: “Our association has been requesting to investigate, punish and penalise the multinational companies like Amazon and Flipkart for the violation and/or exploitation of the loopholes of the FDI policy and Foreign Exchange Management Act.”

It said the traders’ body has been examining various public statements and documents pertaining to the investments made by both Amazon and Walmart and it has come to light that both these companies have been conducting their activities in violation of Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (FEMA Rules). It said that the the latest revelation by Amazon during the arbitration proceedings at an arbitration court in Singapore clearly shows its control over Future Retail.

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“Amazon has claimed that it has absolute control over FRL through the shareholder agreement between Amazon and Future Coupons Private Limited,” it said. “While FCL has only 9.2 per cent equity participation in FRL, but by the way of shareholder agreement between Amazon and FCL, it has full control over FRL,” it alleged.

CAIT also told DPIIT that Amazon indirectly invested around Rs 4,200 crore and took over control of More Retail Limited. It also made allegations against Flipkart and said that it has on numerous occasions, brought to the notice of the authorities about the operation of inventory-based model of e-commerce, that is prohibited to foreign companies, by Flipkart.

“Flipkart has been controlling the inventories of the goods and services being sold on its eCommerce marketplace platform operated by its e-commerce marketplace entity named Flipkart internet services Limited. Such control is exercised through sale of goods and services through its affiliate companies, such as WS retail, Omnitech retail etc,” it said. It further said that Amazon also is operating an inventory-based model of e-commerce that is prohibited to them being a foreign company.

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