CAIT seeks probe into business models of 16 online platforms, e-commerce firms

NEW DELHI: A traders association has written to the government, seeking a probe into the business models of 16 technology startups and e-commerce companies such as Flipkart, Amazon, Zomato Swiggy and Oyo.

In a letter to Commerce minister Piyush Goyal dated January 24, the Confederation of All India Traders (CAIT) alleged that the common phenomenon in these companies of incurring huge yearly losses and earning revenues is not a healthy business practice.

“Not only their business models but their respective foreign investments and its disbursal, aspect of avoidance of GST & Income Tax revenue and probabilities of burning cash by them should also be investigated,” Praveen Khandelwal, National Secretary General of CAIT said.

In its letter, the trader lobby group has appended a list of 16 companies namely, Amazon, Flipkart, Paytm, Oyo, Big Basket, Grofers, Zomato, Swiggy, Ola, Delhivery, Lenskart, Pepperfry, Rivigo, Make My Trip, PhonePay and Medlife, along with their annual revenue versus loss figures.

“If e-commerce is a loss business then the government should seriously think about ending the e-commerce business in India or take such steps to remove the distortions of the e-commerce business,” Khandelwal said.

CAIT has been long demanding the roll-out of a robust e-commerce policy in the country and set up either a regulatory authority or an e-commerce ombudsman to ensure healthy and competitive business by e-tailers, and price parity between the two channels.

The long-stated tussle between online and offline trade escalated when the Competition Commission of India, this month, ordered a probe into Amazon and Flipkart over their discounting practices, exclusive brand launches on the platforms and the preferential treatment they have allegedly offered to certain mobile phones sellers.

Supporting the nation-wide trader agitation, Commerce and industry minister Piyush Goyal said Amazon was not doing India any favours a day after the company’s CEO Jeff Bezos pledged to invest an additional $1 billion in the country, adding that this was probably on account of a need to fund losses.

“How can a marketplace make such a big loss unless they are indulging in predatory pricing or some unfair trade practices? These are real questions which will need answers,” Goyal said.

“They are investing money over the last few years also in warehousing and certain other activities, which is welcome, it is good, but if they are bringing in money largely to finance losses and those losses in an ecommerce marketplace model, a fair marketplace model in a turnover of $10 billion, if you are going to have a loss of a billion-billion and half dollars, it certainly raises questions, where the loss came from.”