The Confederation of All India Traders (CAIT) has strongly objected the proposed takeover of More by Amazon. It is nothing but a clear case of circumventing the FDI policy in e-commerce and paving the way for others to follow. In other words it’s a mockery of the policy in day light.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal in a joint statement said multi-brand retail by foreign funded companies is not allowed in all the states of India. Further there are many terms and conditions related to disbursement of investment by such companies for creating back-end infrastructure and sourcing goods from MSMEs. They said to the best of their knowledge by creating a complex holding structure, Amazon will be acquiring 49% stake in Witzig Advisory Services which is currently owned by Samara Capital, which is a personal company of Kumar Mangalam Birla. Witzig, which is an Indian company, will then acquire a 99.99% stake of More from Aditya Birla Retail (also majorly owned by Birla).
Both Bhartia and Khandelwal said this is nothing but a practice of circumvention of FDI policy in order to carry on food retail and multi brand retail in India through online and offline mode of sales.
It is highly regretted that CCI has approved the combination based on the ‘competition aspect’ of the deal. However, we are surprised how an illegal deal can be approved only on ‘competition aspect’. It is again regretted that DIPPs current rules are loose and it seems anyone and everyone willing to circumvent rules can create a complex ownership structure and carry on business in India.
Both Bhartia and Khandelwal said they oppose the deal and government should use all its powers to act before it becomes a diplomatic situation. It is more dangerous that any foreign company can use such circumvention to enter any restricted business like defence. There is an urgent need to look in to the issue and the CAIT has urged Union Commerce Minister Suresh Prabhu to take immediate cognisance of this critical issue and order a probe in the matter and till then the takeover should be stayed.
