Govt asks Snapdeal, Paytm Mall to give business details

NEW DELHI: The government has written to Snapdeal and Paytm Mall seeking information on their selling practices as part of a wider probe into deep discounting practices of ecommerce players, people aware of the development said.

The Department for Promotion of Industry and Internal Trade (DPIIT) has sought information about top sellers on these ecommerce platforms and the schemes they offer to vendors. “We have written to large companies that have foreign direct investment-...we want to see what practices they are following,” a government official said.

The government had last month asked top two ecommerce firms Flipkart and Amazon to share details of their top five sellers and total business quantum for each seller, variations of commission agreements they have with various sellers, and how investments from their parents are disbursed, after a series of complaints by offline retailers led by Confederation of All India Traders that deep discounts by these firms were not only a violation of foreign direct investment (FDI) rules but also hurting their business.


This time the government has sent a slightly modified version of questionnaire to some companies, seeking details on investments and sellers, an executive of an ecommerce firm said. “We don’t have private sellers and have shared details of the company’s structure,” the person said on condition of anonymity.

While ecommerce may only have a small market share in the country’s retail segment, in some segments such as electronics it had a significant share, said the government official quoted earlier.

“We confirm that DPIIT has shared a questionnaire with us which is generic in nature and has been shared with all ecommerce companies,” said a Paytm Mall spokesperson. “We have answered the same in the format prescribed.”

Snapdeal did not respond to ET’s email as of press time Friday.

The questionnaire, sent almost a fortnight ago, sought information on schemes offered to SMEs and the top sellers.

An official of one of the ecommerce companies said the government had sent a few questionnaires but they “don’t pertain to circumvention of foreign direct investment norms”.

FEMA Can Deal with FDI Violation, says Goyal
Commerce and industry minister Piyush Goyal has told the Rajya Sabha that any violation of FDI regulations by ecommerce players is covered by the penal provision of the Foreign Exchange Management Act (FEMA), 1999.

In a written reply to a question, the minister said DPIIT has received complaints about ecommerce companies offering deep discounts, indulging in predatory pricing, exercising control over inventory, and influencing the prices of goods sold on the platform. The representation also complained about ecommerce companies engaging in B2C business, he said.

In its questionnaires to Amazon and Flipkart last month, DPIIT had also asked if they were compliant with goods and services tax (GST), and sought details of their capital structure, business models, inventory management system, association with payment gateways, list and share of controlled and uncontrolled sellers, and distributor and retailer price list for preferred/controlled vendors.

Industry insiders said the latest questionnaires would help the government differentiate between compliant and non-compliant answers.

ET had asked Snapdeal and Paytm Mall if they had received questionnaires from DPIIT, what all information did the government seek from companies, and if they included the structure of the company, discounting models, and investments. “The questions are in the nature of the queries as indicated by you,” the Paytm Mall spokesperson said. “We, however, do not confirm if the list from you is inclusive of all questions, nor can we confirm that all your stated questions are in the questionnaire from the department.”

Paytm would wait for the government department for further direction, the spokesperson said. “As a pure-play ecommerce marketplace which is fully compliant with all rules and regulations in letter and spirit, we expect our responses will be satisfactory to the DPIIT.”