CAIT urges govt to curb 'arbitrariness' of foreign cos

Traders' body CAIT on Friday urged the commerce and industry ministry to issue a revised Press Note 2 on FDI in e-commerce marketplaces incorporating stringent provisions to curb the "arbitrariness" of foreign companies.

The Confederation of All India Traders (CAIT) also came down heavily on Amazon, terming its statement at a meeting organised by Department for Promotion of Industry and Internal Trade (DPIIT) on Thursday "extremely ridiculous and hilarious".

Asserting that Amazon had claimed that it has added 1.5 lakh new traders to its portal, CAIT secretary general Praveen Khandelwal said this is a ridiculous argument.

"The question is how many of these traders get business from Amazon.

"It is a well known fact that more than 80 per cent of the total sales on Amazon are made by only about 35 companies, who are close to Amazon, so what is the benefit to the traders of the country," CAIT secretary general Praveen Khandelwal said.

Amazon did not respond to email queries on the CAIT statement.

However, after the meeting on Thursday, an Amazon spokesperson had welcomed industry consultations initiated by DPIIT and the opportunity for a constructive and continuing dialogue with the government.

The spokesperson had also said the FDI policy needs to be stable and predictable for investor confidence as any disruption in business will impact millions of livelihoods and jobs, have negative consequences on MSMEs, startups and offline stores which have barely recovered from the setback of the pandemic.

However, Khandelwal is of the view that foreign investment in companies like Amazon is done to break the rules and laws of the country and that there is no benefit to the country from this type of foreign investment.

National vice chairman of CAIT Brij Mohan Agrawal and secretary Sumit Aggarwal demanded that Commerce Minister Piyush Goyal "change the Press Note 2 to issue a new press note and to bring stringent provisions to curb the arbitrariness of foreign companies".

Also, it should be made sure that the laws are strictly followed and immediate action should be taken against the violators, they said.

Amazon is under ED investigation for misusing Press Notes 2 and 3 and violating the "market place" covenant governing foreign companies in e-commerce.

The US giant has been accused of circumventing FDI law by investing in downstream Indian companies and then lending them deep discounts and preferential placement.

The commerce and industry ministry brought certain changes to Press Note 2 on December 26, 2018 which prohibited e-commerce companies from entering into an agreement for exclusive sale of products along with tightening norms for firms having foreign investment.

In India, the policy as such does not permit FDI (foreign direct investment) in inventory-based model of e-commerce.

Photograph: Brendan McDermid/Reuters