Claiming that foreign e-commerce firms such as Amazon and eBay are “killing domestic players in the Indian market”, the economic wing of the RSS has asked the government to ban not only these, but also Indian players such as Flipkart which have high foreign fund infusion.
Unhappy with the BJP-led government’s overall foreign direct investment policy, leaders of the Swadeshi Jagran Manch (SJM) met Finance Minister Arun Jaitley earlier this month for a discussion on the budget and have sought a white paper on FDI.
“We are of the opinion that FDI in e-commerce should be prohibited by law. Though we do not allow FDI in e-commerce sites, they circumvent the law to sell their product in the country. Even Indian e-commerce firms like Flipkart have turned to be foreign now with funding from outside. There is a lacuna in the law and this cannot be allowed. We have asked the Finance Minister to plug loopholes in the law,” Ashwani Mahajan, SJM national convener, told The Indian Express.
Although Indian law does not allow FDI in e-commerce sites that sell products to customers directly, it allows FDI in market places that link sellers and buyers. In a November 2014 report on e-commerce, Motilal Oswal Securities said that the $11-billion e-commerce market in India is expected to grow 37 per cent to reach $20 billion by the end of this year.
The government, however, does not have any data on the e-commerce industry. Replying to an unstarred question to Rajya Sabha MPs D Raja and M P Achuthan, Minister of State for Consumer Affairs R D Danve said: “At present no official data on e-commerce industry is being compiled/available and there is no proposal under consideration for a separate regulatory framework for e-commerce.”
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“This is more harmful than FDI in retail,” Mahajan said, adding that the firms started their business under the previous UPA government.
According to SJM, e-commerce firms get into predatory pricing which is “unethical”, and will “kill” Indian retailers. “Their explanation for giving high discount is that they are doing it in lieu of the data provided by customers. But ultimately, these foreign companies with deep pockets will destroy Indian retailers,” Mahajan said.
Citing an example, he said while a publisher gives 35 per cent discount on a book to book shop owners, the CEO of the same publishing firm orders the same book on Flipkart at 50 per cent price. “So we have asked the Finance Minister to ban them by law and plug the loopholes. He has to respond to our demands in his budget,” he said.
SJM leaders, who disapproved raising the FDI limit in defence and insurance sectors, asked Jaitley to come out with a white paper on FDI before increasing the FDI cap in other sectors too.
“The government is talking about Make in India, but you are asking for more FDI in different sectors. We want to know what has happened so far. We have asked the government to undertake a study and bring out a white paper,” Mahajan said.
The organisation, which had raised objections to the government’s economic policies even during the Vajpayee-led NDA government, pointed out that the policy on FDI has “not done any good” to the country.
“In 2013-14, FDI inflow was $21.5 billion but the outflow was $34.4 billion. With changes in royalty and dividend rules and salary, the outflow has been on the rise. If the trend continues, and the government opens more sectors, there will be a time when there are no more sectors to open up and the outflow will top $100 billion. This will be very dangerous for our industry,” Mahajan said.