In a communication to Piyush Goyal, Union Commerce & Industry Minister today, the Confederation of All India Traders (CAIT) said that since e-commerce is a promising future mode of business in the Country but greatly vitiated by certain malpractices resulting into creation of an uneven level playing field and unfair competition, the Government must take immediate steps to eliminate all such malpractices enable thee e-commerce market an even level playing field with fair competition. The CAIT has said that it has already launched a nationwide campaign to digitise 7 crore traders of the Country and will bring them on online business but the intent of control & domination of MNCs & Domestic players must be curbed with strict rules and regulations in e-commerce policy.
CAIT National President Mr. B.C.Bhartia & Secretary General Mr. Praveen Khandelwal in the communication sent to Goyal suggested that e-commerce policy should be made a robust policy so that e-commerce market in the Country must not fall prey to the wills and whims of some major e-commerce players. They have urged Goyal to include some mandatory provision in e-commerce policy including mandatory registration of e-commerce companies whether big or small with DPIIT. Since Hon’ble Prime Minister is much emphasising on adoption of digital payments, the Cash on delivery (COD) system in e-commerce should be disposed off and all payments must be in digital payment mode.
An “E-Commerce Ombudsman” should be constituted to deal with violations of Rules & Regulations. Strict action should be proposed against violations of Rules & Regulations. Since Data constitutes a vital element, sufficient provisions should be incorporated to ensure no misuse of Data. A Joint Committee comprising of senior officials, representatives from trade & e-commerce companies should be formed to ensure smooth conduct of business at e-commerce through dialogues.
They further said that under the present policy of the Government, the online retailers can undertake only B2B model of business in retail and for B2C model, they are under obligation to strictly adhere to marketplace model and therefore must have certain fundamentals invariably in their business model including that the technology provider will provide an e-marketplace platform only. The sellers registered with such an e-marketplace shall display their material on the e-market platform and close the deal of selling without having any outer interference. The technology provider will get a commission or agreed fees per successful transaction. The logistic Companies shall also earn revenue by making door deliveries of the orders. Both technology providers and the sellers are under obligation to comply with relevant Laws, Acts, Rules, and Regulations and are not supposed to indulge in any unfair means of business.
Both Mr. Bhartia & Mr. Khandelwal said that instead of playing in a business-like manner as obligatory on them as per fundamentals of marketplace model, such online retailers are by-passing all such fundamentals and taking advantage of systematic loopholes, the online portals have indulged into B2C business format which is a clear violation of the policy of the Government.
The price fiasco on online retail portals has provoked many questions? If these online retailers are nothing other than a marketplace then how can they offer any “SALE” since they are not the owners of the inventory? The right of inventory lies with the sellers registered with such portals. Have they taken the written and express consent of all the sellers registered with them? How the e-commerce companies are able to sell the same brand and quality of goods much cheaper than brick and mortar shops. In many cases, the selling price of an online retailer is much cheaper than the wholesale lending prices of the offline market. In B2B model where is the need for inserting such large scale advertisements by these online retail companies.
Both trade leaders said that the loss accrued to sellers registered on online portals by selling commodities at a much cheaper rate is being subsidized by the marketplace technology owner company, or the Manufacturing Companies owing particular Brands have different price mechanism for online portals under which products are given to them at a much lower price than the offline market, or some entity is funding such losses by remaining behind the curtain for their own various reasons, or it has more influx of products which originate from grey market. It is for either of these reasons, there is a difference in prices in offline and online trade. They apprehended that the set of corporate investors who first lobbied for FDI in multi-brand retail and having failed to enter into the retail trade of India seems to be the same forces who might be operating in e retail sector behind the curtain.
Mr. Bhartia & Mr. Khandelwal has urged Mr. Goyal that Government must distinguish between technology provider v/s foreign investor. The concept of providing technology is well accepted but the issue of deriving foreign investment in Indian Companies owing the technology platform needs to be looked into so as to block any loophole which may provide an advantageous position to global retailers to control and dominate the retail trade at a later stage through online retail portals who are currently making all efforts to generate more and more visitors on their respective portals. There is a need to check the business modalities of the online retailers in cases where they receive financial funding in their portals from overseas and selling commodities in retail on their own portal in a different business entity.
Having considered all the above facts, it is most essential that E-commerce business in India should be made transparent, regulated and making it clean by removing all kinds of unfair practices and elements of dominance. Like offline trade, it should also be subject to check and balances by the Government.
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