Traders’ body CAIT has accused ecommerce major Amazon of violating Foreign Direct Investment (FDI) policy and Foreign Exchange Management Act (FEMA) norms, a charge which the multinational company denied.
The traders’ body in a letter to Commerce Minister Piyush Goyal alleged that the online retailer has not sought government’s approval for conducting multi-brand retail activities in India and demanded action and imposition of a maximum penalty against the company.
“Documents available in the public domain show that Amazon has made an investment of about INR 35,000 Cr in Amazon India, a make-believe ecommerce marketplace platform, but in reality (it is) indirectly carrying multi-brand retail business,” Confederation of All India Traders (CAIT) secretary-general Praveen Khandelwal said.
Denying the allegations, an Amazon spokesperson told PTI, “As a responsible investor and a long-term player in India, Amazon complies with FDI laws and seeks regulatory approvals including from the Competition Commission of India (CCI). Our investment in Future and all investments in India are in compliance with applicable regulations.”
CAIT alleged that Amazon has investment “of about INR 4,200 Cr in More Retail Limited (a multi-brand retail company); on the face of it looks like it is controlled by an Alternative Investment Fund (AIF) of Samara Capital, and has an investment of about INR 1,430 Cr in Future Coupons Private Limited, a controlling investment in Future Retail Limited (a multi-brand retail company).”
The traders’ body alleged that all these investments were in violation of FEMA Rules and Regulations, and urged the government to take immediate action.
CAIT in its letter to Goyal demanded that “The Enforcement Directorate (ED) must take strict action against Amazon for its brazen violations including the imposition of maximum penalties against them”.
Khandelwal said he has called a meeting of trade leaders from across the country on Friday via video conferencing on the issue.
Traders may be compelled to take to the streets to agitate if no action is taken against Amazon immediately and CAIT will not shy away from approaching the courts if needed on the issue, he added.
The allegations come even as the government said that will not tolerate violation of government policy. Last month minister of state for commerce Som Parkash had said that the government will not spare any efforts in maintaining a level-playing field in ecommerce.
Meanwhile, CAIT had made a decision to launch its own ecommerce portal BharatEMarket in September this year in a bid to list its 7 crore traders and nearly 40,000 trade associations it represents on the marketplace under the ‘Phygital model’.
In May, CAIT had tied up with the Department for Promotion of Industry and Internal Trade (DPIIT) to plug millions of mom-and-pop or kirana shops in the country to digital commerce. The traders association has clarified that the platform will be very different from the private ecommerce entities and will focus on retailers and customers.
CAIT Vs Amazon
Over the years, CAIT has raised a series of allegations saying Amazon India and had also reached out to Prime Minister Narendra Modi, minister of industry and commerce Piyush Goyal, finance minister Nirmala Sitharaman, Competition Commission of India (CCI) and other government departments and officials.