Ministry Of Commerce Directs RBI To Take Action On FDI Violation Complaints By Ecommerce Retailers

The All India Online Vendors Association’s (AIOVA) concerns on violation of FDI policy by ecommerce players has been forwarded to the Reserve Bank of India (RBI) by the Ministry of Commerce.

For those who are not aware about the development, the retail group have logged a complaint against the aggressive discount strategies adopted by online ecommerce portals. This, in a sense, violates FDI guidelines which state, “An ecommerce entity offering the marketplace will not ‘directly or indirectly’ influence the sale price of goods or services’.

Not only this, new FDI guidelines also led to a protest from more than 100 ecommerce companies, in April 2016.

In answer to the complaint, the commerce ministry along with the Department of Industrial Policy and Promotion (DIPP) informed the AIOVA that FDI-related issues come under the concern of the Foreign Exchange Management Act, 1999. Therefore, the country’s central bank has the jurisdiction to look into the matter.

Whereas, the Ecommerce Committee which comes under the chairmanship of Amitabh Kant, CEO, Niti Aayog had told the AIOVA that their concerns had been noted but the committee still needs to submit its recommendation on these issues.

The Indian Government had earlier warned ecommerce companies of stringent action for not responding to its queries on customer grievances.

This was not the first time when AIOVA has raised concerns either. In May 2016, the Confederation of All India Traders (CAIT) filed a complaint with the Department of Industrial Policy & Promotion (DIPP) against Flipkart for violation of FDI guidelines in ecommerce.

Earlier in September 2016, Inc42 reported that representatives of AIOVA met Nirmala Sitharaman ,Minister of State (Independent Charge) for Ministry of Commerce & Industry regarding the issue of Askmebazaar.com’s shutdown. Following the meeting, the Ministry assured Sitharaman of taking up the pending payment issue of the online etailer on a priority basis. In September 2016, Ministry of Consumer Affairs had appointed a team to resolve consumer grievances related to ecommerce companies and others.

Recently in 2017, sellers went to Sitharaman to appeal to her to safeguard their money that ecommerce unicorn Snapdeal holds, in the form of outstanding dues. In answer to this, in March 2017, the Minister had stated that she would inquire about vendors’ complaints of default payments by the player.

Not only this, Axis Bank had also issued notices to Snapdeal sellers seeking immediate repayment of outstanding loans. After which, the State Bank of India (SBI) had also issued a notice to several Snapdeal sellers to immediately pay up their dues.

(This development was reported by TOI)