Ecomm firms lobbying hard, govt should probe their biz: CAIT

New Delhi: Traders’ body Confederation of All India Traders (CAIT) urged the government not to accede to any demand by large e-commerce players or US associations for changes or delayed implementation of the updates FDI norms for ecommerce.

It also demanded that the government should make it mandatory for the ecommerce companies to obtain a compliance certificate as on March 3, 2019 and the companies that do not have the certificate should be restricted to operate their ecommerce portal any more.

“The companies should not be allowed to raise funds until compliance certificate is obtained. Already companies have circumvented law by converting marketplace to an open market for B2C business which is against the FDI policy and its letter and spirit,” Praveen Khandelwal, secretary general, CAIT, said.

The group also reiterated its earlier demand that the FDI norms related to ecommerce companies should be implemented on domestic online players also to restrict them from adopting any unethical business practices.

He further added that in utter violation of Press Note 3 of 2016 – which articulated the FDI norms for ecommerce - major ecommerce players started operating in the B2C space and building multiple tiers of companies with the possible intention of circumventing the regulations.

“It was clear from modus operandi that these market places were probably hoping that these infringements would be ignored once the operations become the norm. A deep analysis of behavioural economics of these individual entities clearly suggest that the FDI direction v/s the cash burn was extremely unusual behaviour and is only conducted to camouflage the intent of the policy and the government,” he said.

Tightening norms for ecommerce firms having foreign investment, the government barred online marketplaces such as Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price. 

The confederation has earlier written to commerce minister Suresh Prabhu to bring out t a comprehensive e-commerce policy be brought about at the earliest, and underlined the need for an effective regulator, that is “armed with enforcement and adjudicatory powers to enforce e-commerce policy”.