CAIT urges DPIIT to penalise Amazon and Flipkart

Nov 22 2020 10:36 PM
CAIT urges DPIIT to penalise Amazon and Flipkart

The Confederation of All India Traders (CAIT) has written to the Department for Promotion of Industry and Internal Trade (DPIIT) to take action against e-commerce major Amazon and Flipkart for alleged violation of FDI and FEMA norms. In a letter to the DPIIT Secretary, Guruprasad Mohapatra, the traders' body said: "Our association has been requesting your good office to take appropriate steps and investigate, punish and penalize the multinational companies like Amazon and Flipkart (owned by foreign multinational company 'Walmart', interchangeably used hereinafter) for the blatant violation and/or by exploitation of the loopholes of the FDI policy and Foreign Exchange Management Act."

Examination of different public statements and documents subjecting to the investments made by both Amazon and Walmart informs that both these companies have been conducting their activities in blatant violation  of Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (FEMA Rules). Amazon control over Future Retail was explicit by the former's revelation during the arbitration proceedings at an arbitration court in Singapore. 

CAIT also told DPIIT that Amazon indirectly invested around Rs 4,200 crore and took over control of More Retail Limited. CAIT also alleged against Flipkart and said that it has on numerous occasions, brought to the notice of the authorities about the operation of inventory-based model of e-commerce, that is prohibited to foreign companies, by Flipkart. The control is exercised through sale of goods  and services through its affiliate companies, such as WS retail, Omnitech retail. "Applying Section 13 of the Foreign Exchange Management Act, 1999, the monetary penalty at three times the investments that are in contravention, Amazon will be liable for a penalty amounting to over Rs 1,20,000 crores and Flipkart will be liable for a penalty amounting to over Rs 3.8 lakh crores." 

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