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2019 In Review: Indian Startup Ecosystem’s Biggest Controversies

2019 In Review: Indian Startup Ecosystem’s Biggest Controversies

As another decade of the 21st century comes to an end, 2019 has been a see-saw year with most infamous scandals and controversies

This article is part of Inc42’s special year-end series — 2019 In Review — in which we will refresh your memory on the major developments in the Indian startup ecosystem such as funding deals and acquisitions, and their impact on various stakeholders — from entrepreneurs to investors. Find more stories from this series here.


Entrepreneurship fuelled by ambition to disrupt the status quo defines the idea of startups across the world. At the crux of this ambition is the desire to change the world. While we have success stories such as Google, Microsoft, Apple, Amazon, PayPal and others, we also have cautionary tales such as ‘The Wolf of Wall Street’ or indeed the very real examples of WeWork and a slew of other startups that were caught up in controversy.

“I sincerely hope is that my life serves as a cautionary tale to the rich and poor alike” ― Jordan Belfort, The Wolf of Wall Street

So when we celebrate the successes of various businesses each passing year, it’s also right to look back at what went wrong, what drew outrage and sparked protests and how startups deal with the challenge of operating in a hyper-connected world, where everyone can share their viewpoint.

In 2019, one of the most powerful outlets for consumers and customers to voice their opinion was social media and this means many brands had to work on accountability in the public arena. From the initial euphoria of three new unicorns to kickstart the year to questions of profitability towards the end, it’s been a see-saw year. As the industry gets more competitive, it can become a catalyst for fierce rivalries and misunderstandings, which fuel controversy and scandals.

As another decade of the 21st century comes to an end, let’s examine some of the most infamous scandals and controversies that started, happened, and/or escalated in the startup ecosystem web.

Zomato: The Cost Of Food Is Religion And Logging Out

In one of the biggest examples of how social media can become an accountability monitor for startups, Gurugram-headquartered unicorn Zomato faced the brunt for taking a stand against an Islamophobic customer complaint. In July, Zomato told a customer, who had announced that he did not want a ‘non-Hindu’ deliveryman, “Food doesn’t have a religion. It is a religion.”

As the discussions spilled outside Twitter, Zomato bounced from negative tweets to bad reviews and ratings. #ZomatoUninstalled and #Boycottzomato trended on social media for almost a week and the company faced customer ire across many online platforms.

It had barely made it out of this controversy when soon in August-mid, several hundred restaurateurs voiced anger against Zomato, Swiggy, EazyDiner, Dineout’s Gourmet Passport, Nearbuy, MagicPin among others. Called the #logout campaign, a group of over 1200 restaurants across the country started delisting themselves from food aggregation and discovery platforms. Restaurants cited “unreasonably high commissions, payment terms and arbitrarily applied additional charges” as reasons for wanting to cut ties with food aggregators.

With the involvement of National Restaurant Association of India (NRAI) and Federation of Hotel and Restaurant Association of India, Zomato and other food delivery and discovery companies were forced to review their policies.

In response, Zomato closed down the contentious Infinity Dining feature right before the final discussion with NRAI. However, the company refused to give in completely. Along with altering the Zomato Gold policy by limiting Gold offer redemption only once a day, the company also extended the services for doorstep delivery despite the restaurant body’s protest.

In October 2019, minister of commerce and industry Piyush Goyal decided to intervene in the case and took it upon himself to resolve the deep discounting issues.

While the protests have become quieter, Zomato has had to deal with the fallout of that and it could still have to make changes in its business model, if the government decides to intervene further.

OYO: The Legal Hassles With FHRAI, Hoteliers In India And US

startup controversies

Gurugram-headquartered hospitality giant OYO has been the star of the investors’ eyes with its continued expansion spree resulting in consistently large funding rounds, but not everyone is happy. Over this past year, OYO has been facing legal hurdles from hotel associations as well as hoteliers while unhappy customers are a constant too.

In December 2018, the Hotel and Restaurant Association of Gujarat along with associations in Mumbai, Delhi, Mysuru, Bengaluru, Kolkata and Hyderabad came together to explore legal action against OYO. This spilled over into 2019 when in January, the FHRAI alleged that more than 200 hotels have ended agreements with OYO over mismanagement of contracts, arbitrary charges and other disputes, industry associations said, adding that others want to exit contracts but are stuck for various reasons.

Since then, several protests have taken place in Pune, Nashik, Kota, Manali, Jaipur and Ahmedabad as well as Bengaluru and Delhi. For hotel owners, the biggest pain point is that OYO reduces payments owed to them on the pretext of deductions, which they say are not specified clearly in the contracts.

Later, in July 2019, FHRAI filed a complaint with the Competition Commission of India (CCI) against OYO. The hotel body alleged that three months after OYO promised its partners an 18% interest on delayed payments and launched complaint redressal solutions, the issues continue to be unresolved.

In September and November 2019, two Bengaluru hoteliers filed an FIR against OYO founder and CEO Ritesh Agarwal and team members for non-payment of dues of minimum guarantees. However, OYO spokesperson has refuted “the claims made in the complaint that has been wrongfully filed against our founder and six other office bearers, based on false allegations and exaggeration on a regular commercial dispute.”

In October 2019, CCI said it will continue to examine the hoteliers’ complaints against three big players in the hospitality sector — MakeMyTrip, Goibibo and OYO — for affecting their businesses, due to predatory practices, high commissions and non-uniform commissions. CCI then directed a government official to carry out a detailed investigation into the matter and submit a report to the commission within 150 days.

Also in October 2019, discontent of hotel owners with OYO came to light in the United States of America as several US OYO hotel partners raised issues ranging from poor software, loss of revenue as well as criminal activities within rooms that are managed by OYO. The hotels have also alleged ignored or missing payments, even though they had been promised a certain amount as a guarantee by OYO. Moreover, hotel partners have claimed that they have no rights over the booking or room charge.

Mauritius Files: Dodging Indian Tax Structure 

startup controversies

In July 2019, the International Consortium of Investigative Journalists (ICIJ) did an exposé on how major investors including Sequoia Capital, one of the most active investors in the Indian startup ecosystem, have been reducing their tax burden in India by setting up shell companies in Mauritius.

The report shows that Sequoia had hired a law firm by the name CDP between 2012 to 2014 to advise on its Mauritian entities. While it is unclear how much money was saved in taxes by Sequoia, there are no indications that Sequoia had any full-time staff permanently based in Mauritius.

Besides Sequoia, Mayfield India Ltd, Trend Capital India Holding Ltd, iYogi Limited, MakeMyTrip Limited, Epsilon Venture Partners and others have also been named in the Mauritius Files are bringing money into India through offshore accounts.

While there is nothing illegal in routing funds in this manner, it is to be noted that these inferences make the government lose a big chunk of tax revenue, as major VCs use the Mauritius’s attractive tax regime to bring funds in from offshore accounts.

Responding to the controversy, a Sequoia Capital India spokesperson said the company complies with all local laws in every territory it operates in. Further, an official joint communique by the ministry of finance and economic development, ministry of financial services and good governance, the financial services commission, and the economic development board of Mauritius debunked the report, saying it maligned the name of Mauritius even through plenty of other countries have the same laws, and it also alleged that ICIJ obtained the documents illegally.

Homigo Scam Throws Up Doubts About Co-Living Model

While real estate technology has slowly taken ground in India, sectors such as co-living are still new and growing. Hence, one wrong example across offers set back to the whole industry, which happened with the case of Homigo.

In March 2019, reports surfaced that Bengaluru-based coliving startup Homigo’s founders — Nikunj Bhatija, Jatin Mitruka and Aakash Verma — were said to be on the run along with money collected from home-owners it has tied up with in over 100 of its leased properties across Bengaluru.

The company was said to be in talks to raise around INR 14 Cr – INR 28 Cr ($2 Mn – $4 Mn) by March 2019. According to reports, there were acquisition talks with Bengaluru-based online home rental marketplace Nestaway too. However, neither deal materialised and Nestaway had to issue a notice to Homigo users that it is not in possession of their deposits.

Meanwhile, on March 6, Homigo employees reported that a mob of around 50 comprising owners and tenants from Homigo properties gathered at the company’s headquarters in Bengaluru. The company was forced to close its office premises as a result of this incident.

In April, Homigo’s fraud cases, registered at various police stations across Bengaluru including Mico Layout and BTM Layout police stations, were transferred to the CCB Bengaluru at Commissioner of Police T Suneel’s order.

In July, Karnataka High Court passed an interim stay order on the investigation asking the Central Crime Branch (CCB) Bengaluru to drop the case.

Chinese Ecommerce Under Customs Scanner

startup controversies

In June, Mumbai Customs seized about 500 packages belonging to customers of Chinese retailer Shein and Club Factory.

Over a dozen Chinese ecommerce platforms had been in the dock for allegedly dodging customs duties by passing goods off as gifts. Customs officials had alerted other ports of entry about the malpractice and also informed the National Risk Management portal, an alert system for duty evaders.

As a result in July, Shein had to shutter its operations partially and began refunding money to customers with pending orders. The major reason for this was a lull in sales and delivery issues.  Soon, customs officials at the courier terminals in Bengaluru and Delhi began stopping clearing parcels shipped under the CB-12 (gift and samples) route.

The government was even pondering a combination of goods and services tax (GST) and customs duty of up to 50% on orders sent from China. Since then, the companies had help from their Indian subsidiaries which act as intermediaries to cut down on taxes. In November, reports surfaced that central board of indirect taxes and customs (CBIC) has decided to scrap the provision for free import of goods up to INR 5K altogether.

In a notification on December 12, Directorate General of Foreign Trade under the ministry of commerce prohibited import of goods under ‘gifts’.

“Import of goods, including those purchased from ecommerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited except for life saving drugs/medicines and Rakhi (a sacred thread tied by a sister to her brother on occasion of Raksha Bandhan).”

The Short-Lived Bans

  • TikTok Loses Its Way

startup controversies

On April 4, 2019, Madras High Court passed an order to ban the Chinese video sharing platform TikTok noting that the app exposes children to pornography, and makes them vulnerable to sexual predators online. TikTok had more than 54 Mn active users in India and said it was losing INR 4.5 Cr every day due to the ban. TikTok had also been removed from Google and Apple app stores, preventing new users from downloading the app.

TikTok had appealed to the Supreme Court, arguing that the Madras High Court’s decision to ban the app, and IT ministry’s order to comply with the ruling, violated the fundamental right to free speech and expression. After 20 days, on April 24, the ban was lifted by the Madras High Court after the Supreme Court directed to take a final decision on the matter.

TikTok said that it has removed over 6 Mn videos that violated its community guidelines in the last year and also introduced an age-gate feature for its new users, which only allows only users aged 13 and above to create an account on TikTok.

Further the company also appointed Sandhya Sharma as TikTok India’s public policy head, the social media app had also put in place protective measures to remove objectionable content with a human moderation team based in over 20 countries and regions now cover 36 languages.

  • Bike Taxis Break Rules?

startup controversies

Over the last few years, app-based taxi operations have taken over Indian cities and with India’s love for two-wheelers, even bike taxis and rentals have picked up pace. However, this year, due to lack of clarity in the motor vehicles law, multiple state governments had tried to put a halt on such operations.

It began in February, when Karnataka transport department had written to Ola and Rapido to stop its bike taxi services immediately. The state’s transport commissioner said that bike taxi sharing services are not legal in Bengaluru without a policy in place.

The Karnataka transport department had declared Uber and Ola bike sharing services as “illegal” in 2016. The services were banned from the state. However, with the ban on bike taxi operations, Ola got into further trouble in March, when the transport department stopped it from running cab operations in the state and its license was suspended for six months, over allegations that the company was violating the license conditions for running bike taxis.

However, this ban was short-lived, as within two days the ban was lifted with the interference of Karnataka’s minister for Social Welfare, Priyank Kharge.

However, Ola pursued the case till the court against the Karnataka transport department in April. The court pulled up the department saying that a single company cannot be targetted for offering bike taxi services while its rivals continue to offer similar services. Despite this, the rules haven’t changed, so bike taxis remain illegal in Karnataka.

While Ola barely got out of the problem unscathed, Rapido fell in trouble in Tamil Nadu in July. The Madras High Court banned the company from running operations till the state government formulates new regulations.

The court had even asked Apple Store and Google Play Store to restrict the access of the Rapido app in Tamil Nadu. Around the same time, about 38 Rapido bike-taxis were seized by authorities for running illegally and without permission.

In August, the court stayed the ban order until the state government frames regulations for services such as car pooling and bike taxis. It also stayed the ruling on the Rapido app ban on Google Play Store and Apple App Store.

However, later this year, the centre approved amendments in the Motor Vehicles Act, which gives governments the power to regulate Ola, Uber and other app-based mobility services.

  • E-Cigarettes Stubbed Out

The first concerns around electronic nicotine delivery systems (ENDS) were raised in 2018, but the major changes happened in 2019 pulling down the industry with a ban on e-cigarettes, vapes and other ENDS.

The Indian law enforcement and customs department have been cracking down on ENDS crossing the border since early 2019. In March, the Central Drug Standard Control Organisation issued a notice to halt sales and marketing of nicotine devices. However, the trade ministry said in April that it cannot impose a ban on e-cigarette imports till local production is halted.

In late August, the ministry of health had proposed a prison sentence under an executive order to ban the production and import of electronic cigarettes. In its opinion, the ministry needed to ensure e-cigarettes do not become an epidemic among minors and young adults. The ministry had also proposed a prison sentence of up to three years and a further penalty of up to INR 5 Lakh for repeat offenders.

However, in September, FM Nirmala Sitharaman announced the ban on any operations based around e-cigarettes. This includes “production, manufacturing, import/export, transport, sale, distribution, storage and advertising related to e-cigarettes”.

The companies challenged this decision in court over the next few months. In November, Bombay High Court allowed the e-cigarette manufacturers and distributors to resume the sales of the products, stating that e-cigarettes are not drugs.

But the relief was short lived, as in December first week, the Lok Sabha and Rajya Sabha passed the Prohibition of Electronic Cigarettes Bill, 2019, officially prohibiting the production, trade, transport, storage and advertisement of e-cigarettes in India.

Data Breaches On The Rise In India

Data is the new oil and privacy is the new controversy. Concerns around data security gathered pace since Cambridge Analytica controversy last year and continued to be a major reality check for tech enthusiasts.

In 2019, we saw several cases of privacy and data breaches from global messaging giants to smaller Indian startups falling prey to hacks and weak security practices.

WhatsApp Pegasus Spying Scandal

In one of the biggest such cases, in September 2019, WhatsApp revealed that a spyware attack called Pegasus had affected thousands around the world with on 121 Indians targeted.

WhatsApp added the attackers had used servers and internet-hosting services that were previously associated with NSO Group, which develops the Pegasus spyware. Moreover, the company claims that it was able to track certain accounts, which were used to attack and spy, back to NSO. While NSO said that it works exclusively with governments, the Indian government denied any involvement.

In November, the Indian government announced that it would conduct an audit of WhatsApp’s security systems to prevent any spying from happening in the country. Union Minister Ravi Shankar Prasad had then said that WhatsApp in two high-level meetings in July and September 2019, never mentioned anything about the security breach or cyber-attacks on Indian users. However, when they reported the incident to CERT-In, it had only mentioned that the company had identified the vulnerability and fixed it, without the mention of Pegasus or spying on Indian citizens.

Indian lawmakers summoned executives of WhatsApp to discuss the spyware debacle on December 11.

Other Major Privacy Breaches In India In 2019

Beyond WhatsApp Pegasus, there had been several instances of data breach this year. Here’s a few of them:

Credit Card Data On Sale

  • Almost 1.3 Mn debit and credit card details have been put up for sale on a website called Joker’s Stash on October 28, 2019. The database contains details from various issuing banks and 98% of the leaked data belongs to Indian customers.

Flipkart, Myntra User Data Leaked

  • Data of Flipkart and Myntra users was reportedly compromised by a phishing group operating from two offices in Noida. The gang was found to be in possession of sensitive user data including names, email IDs, shipping address, customer buying history and order IDs,

Government Health Portal Compromised

  • Indian government’s health portal, Online Registration System (ORS) leaked out the details of two million patients last year. A flaw in ORS website allowed users to access patient details — name, address, age, mobile number, appointments, Unique Health Identification (UHID), partial Aadhaar numbers, and disease details.

OYO Customer Data Revealed

  • Due to a security flaw, OYO’s customer data, which included booking IDs, phone numbers, the number of people in a room and the location of the hotel, was public in October.

CashKaro Breached

  • In October, a security research team at Safety Detectives alleged that Cashkaro and its UK-based parent company Pouringpounds has compromised data of up to 3.5 Mn individuals. This includes users’ names, mobile numbers, email addresses, plain text passwords, bank details linked with the account, IP addresses of the individual users, etc.

Gujarat Government Leaks Data

  • In September, Gujarat government’s real estate regulatory authority website allegedly left one of its download URL unprotected, which in turn exposed sensitive citizen data such as PAN cards, Aadhaar cards, passport size photos, income tax details among other documents.

Fintech Security Called Into Question

  • vpnMentor found data breaches in two Indian fintech startups — Credit Fair and Chqbook on July 24. For Chqbook, the research group claimed to have accessed 67 GB of user data including sensitive information such as user’s phone number, physical address, email, credit card number, expiry date, transactions history, plain text passwords, gender, income, and employment profile among other fields.

AP Govt Aadhaar Leak

  • In May, Andhra Pradesh’s Agricultural Ministry website publicly uploaded the list of its scheme beneficiaries containing private details such as mobile number, caste, village division, in addition to the benefactor’s Aadhaar number.

Justdial Security Flaw

  • In April, an independent security researcher discovered a major security loophole in Justdial’s database that has exposed user data from over 100 Mn users. This included including name, email, mobile number, gender, birth dates, address, photo, company, occupation & other details are publicly accessible.

Public Utility Service Leaves Details Unsecured

  • In February, Aadhaar details of over 6.7 Mn users containing details such as names, addresses and the Aadhaar numbers were leaked on Indane’s website. The leak happened through the section of the website meant for Indane dealers and distributors, which can be accessed through a username and password.

In The Court: Battling Patents, Trademarks And More

  • PhonePe vs BharatPe

Taking its complaints to the Delhi High Court in September, Bengaluru-based PhonePe claimed trademark rights over the suffix ‘Pe’, and sought an injunction order against BharatPe from using the name. PhonePe had filed a lawsuit in May 2019.

PhonePe had first raised the issue in August last year, and sent a legal notice to BharatPe seeking the removal of the suffix. But Delhi NCR-based BharatPe changed its logo and colour scheme, which did not go down well with PhonePe, which is why the company decided to take the matter to court.

The case was scheduled for further hearing in October, but there has been no update yet.

  • Curefit Vs Book Your Game

In August, Bengaluru-based gym marketplace Book Your Game (BYG) sued Bengaluru-based healthtech startup Curefit. The company claimed that Cure.fit had offered to acquire it for about INR 5 Cr in June, but subsequently retracted after taking a peek at crucial data and intellectual property. The petition further said that ”employees of BYG began to be inducted as employees of Curefit.

At the time, Bengaluru City Civil Court had restrained Curefit from launching, promoting, marketing or selling any product or service using the ‘Gym.Fit, CultX, and Sports.fit’ names, in any manner. Curefit was set to launch a national gym subscription called Gym.Fit, which aggregates gyms across the city.

However, before the case could be taken further, in October, the companies settled the case out of court. Curefit settled by paying close to the deal value in cash, while both parties mutually decided to not go ahead with the deal. As a result, Book Your Game withdrew its case.

Further in June, a man lodged a complaint with police under IPC sections 420 (cheating) and 406 (criminal breach of trust) against Hrithik Roshan, being the firm’s brand ambassador and three senior officials of the company. He alleged that ‘false promises’ were made in the company ads regarding services offered by the fitness centre.

  • TikTok Vs ShareChat

In August, ByteDance-owned TikTok sent takedown notices to Sharechat after users uploaded TikTok videos on the Indian company’s platform. The Chinese company claimed “exclusive copyright” over TikTok content because of a contractual arrangement between the app and creators. The video app said that it has the sole right to initiate and control legal action over this.

Following the takedown notices, Sharechat was forced to take the videos down. Not giving up this easily, soon ShareChat wrote to the government arguing the Chinese app’s claims on “exclusivity” of its content is inconsistent with the platform’s claims to be an intermediary.

ShareChat, in the letter, added that Section 79 of the IT Act, 2000 prevents intermediaries from initiating any transmission, selecting receivers and selecting or modifying the information contained in the transmission. However, TikTok maintained that it is just an intermediary that provides a platform to content creators.

  • GOQii Vs Flipkart

In May, fitness and wearable startup GOQii said it is taking legal action against ecommerce giant Flipkart due to deep discounting of its products which allegedly violate the sales agreement between the companies. The company claimed that Flipkart has been selling the GOQii products at unauthorised 70 to 80% discount, which the fitness company calls predatory pricing.

Denying the allegations, Flipkart told the department for promotion of industry and internal trade (DPIIT) and the competition commission of India (CCI) that GOQii’s allegations are baseless claiming that the product’s resale value is decided by the online resellers, not Flipkart.

However, Mumbai City Civil Court passed an interim order to stop Flipkart and its sellers from selling GOQii’s wearable devices. But soon in June, GOQii and Flipkart announced a resolution to their dispute and said that the dispute had been resolved and GOQii health devices would again be available on Flipkart while details around how the settlement was reached not being disclosed.

RSS Vs Video Streaming Platforms

Since June 2019, representatives of the Hindu right-wing organisation Rashtriya Swayamsevak Sangh (RSS) held several meetings with OTT platforms in Delhi and Mumbai over so-called ‘anti-national’ and ‘anti-Hindu’ content online.

RSS demanded the video streaming platforms should “represent real Indian culture and ethics”, instead of giving in to economic and corporate interests. The organisation also urged companies to remove certain content which it said was “not appropriate” for Indian viewers.

The latest series of protest this year, started with the launch of Netflix original show Leila in June 2019. Then there were objections about episodes from another Netflix show called The Patriot Act By Hasan Minhaj. Amazon Prime Videos original series such as Mirzapur and The Family Man have also raised similar concerns.

However, as a sigh of relief, in November, ministry of information and broadcast (I&B) emphasised that the OTT platforms should come together and impose a self-regulation model, which will not require any intervention from the government’s side.

Further, the Internet and Mobile Association of India (IAMAI) has also said that is working on a “Code of Best Practices” for video streaming and other content platforms to follow.

Gaming or Gambling? Skill Gaming Under The Scanner

startup controversies

The worldwide #MeToo movement, which began in the US in 2017, caught fire in India in 2018. After Tanushree Dutta accused fellow actor Nana Patekar of sexual harassment during a shoot. TVF CEO Arunabh Kumar, ScoopWhoop cofounder Suparn Pandey were also accused of sexual misconduct as well last year.

This year began with some serious allegations as well. In March, a former female employee of WebEngage had alleged that CEO Avlesh Singh is a habitual sexual offender and was involved in several sexual harassment incidents including one which affected her directly. While the duo was in a consensual relationship, things turned sour over Singh’s past relationships. The ex-employee also alleged that Singh was involved in multiple affairs with ex-employees dating back to 2013.

The company’s board conducted enquiries on Singh before clearing him of wrongdoing. The investigation by WebEngage explained that the relationship between Singh and the woman was “largely consensual”, but added that the matter was examined again after the former employee raised the allegation afresh.

However, there has been no update on the case yet. Further, Singh continues to be the CEO and has been posting updates of the company’s performance as well.

On the other hand, on the company level, it has come to light that Walmart-owned Flipkart and its subsidiaries— Flipkart Internet and Flipkart India— had received 15 sexual harassment complainst in FY19. Of this, 10 had been resolved for the year while the remaining five were unresolved in the year.

Further, Uber released a safety study in December which found more than 3,000 allegations of sexual assaults involving drivers or passengers on its platform in the US last year. During the time period, an average of more than 3.1 Mn trips took place each day in the US.

Traders’ Bodies Vs Amazon, Flipkart

startup controversies

The year for ecommerce started with the change in rules for foreign direct investment (FDI), negatively impacting the business models of marketplaces such as Flipkart and Amazon. While this was cheered on by various trader bodies, soon the concerns of traders’ elevated to alleged deep discounts being offered by these companies. The traders’ even alleged that these marketplaces are flouting FDI rules, and hence, continue to offer discounts.

Confederation of All Indian Traders (CAIT) has been, in all its meetings with commerce minister Piyush Goyal, insisting that ecommerce platforms’ deep discounting methods have created an unlevel playing field for the retail traders, vendors and brick-and-mortar stores. The traders say that it is not a free and fair marketplace.

Recently, Akhil Bhartiya Udyog Vyapar Mandal, along with local retailers and distributors, locked down the Flipkart’s Kanpur warehouse in Kanpur. The group that works towards traders’ rights, said that online marketplaces are indulging in unfair means to shrink the business of brick and mortar stores.

CAIT also has emails sent by Flipkart and Amazon to sellers, asking them to offer discounts on a sharing basis and reward them back with credits. The body has been writing to the Prime Minister Narendra Modi, finance minister Nirmala Sitharaman, and union minister of industry and commerce, Piyush Goyal to take action against the companies.

Most recently, in December, CAIT has urged PM Modi to take notice of the business models of Amazon and Flipkart as, according to them, they are violating the Press Note 2. CAIT added that practices followed by ecommerce players like deep discounting, predatory pricing, controlling inventory and maintaining preferential seller system have created an uneven playing field, unfair and unethical competition. The traders’ body also accused ecommerce players of destabilising retail trade of India.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.