Confederation of All India Traders files complaint against Flipkart with ED

The Confederation of All India Traders (CAIT) has filed a complaint against e- commerce major Flipkart with Enforcement Directorate (ED) alleging that Flipkart was grossly flouting FDI policy of the Government and circumventing the law in its favour so as to grab the market.

The CAIT has urged the ED to investigate business module of other E Commerce Companies also as largely everyone is circumventing the law. CAIT in its petition to ED said that Flipkart in the guise of operating under a marketplace model is actively engaged in the inventory-based model of e-commerce.

In a statement on Friday the traders’ body said, ”Their own admission before a tax authority shows that Flipkart is engaging in buying of goods which are ultimately sold on their platform. Flipkart tried to circumvent the law by routing the sales via their preferred sellers, who are their affiliates. It is a clear case of what they cannot do directly, they are doing it indirectly and this goes against the teeth of any law, including FDI policy and as such, Flipkart should liable.”

The FDI policy mandates that in order to ensure that the marketplace does not own the inventory, it is stipulated the name, address and contact details of the sellers should be clearly made available while displaying the nature and price of these goods on the online platform. The said details are conspicuously absent in Flipkart’s platform, the statement said.

Flipkart is in charge of delivery of goods to consumer, which is prohibited under FDI policy, it added. The FDI policy provides that an E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold.

Such an ownership over the inventory will render the business into inventory based model. The key word used is “goods purported to be sold”, thus is of a wide coverage. Thus, at no points during the entire supply chain, the market place should have control / ownership over goods which are sold on its platform.
Flipkart purchases goods and sells at discounted prices, while incurring a loss, to few preferential sellers, which are further, sold on its platform.
When tried to contact Flipkart authorities for their version on the CAIT move nobody was available to comment.

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