Domestic retail bodies that claim the Flipkart-Walmart deal represents a backdoor entry by multinational giants into India’s retail space, are now pushing for the Enforcement Directorate (ED) to initiate an official probe into the multi-billion dollar deal.
On Friday, the Confederation of All India Traders (CAIT) announced it filed a complaint with the ED against Flipkart, alleging that the e-commerce major violated government's foreign direct investment (FDI) norms.
CAIT said: “We have urged the ED to investigate the business module of other e-commerce companies also as largely everyone is circumventing the law, Flipkart is one example of that.”
CAIT has charged Flipkart with engaging in the inventory-based model of e-commerce, where the inventory of goods and services is owned by the e-commerce entity and sold to the consumers directly. No FDI is currently allowed in this particular model of business.
On the other hand, a marketplace model of e-commerce means the company simply provides an information technology platform on a digital and electronic network to act as a facilitator between the buyer and the seller. Current rules also stipulate e-commerce players can’t source more than 25 per cent of all products sold on their platforms from a single seller.
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