Traders’ body CAIT on June 1 said it has filed a complaint against Flipkart with the Enforcement Directorate for alleged violation of the government’s foreign direct investment (FDI) policy. In a statement, the Confederation of All India Traders (CAIT) said it “has urged the ED to investigate the business module of other e-commerce companies also as largely everyone is circumventing the law, Flipkart is one example of that”.
Emails sent to Flipkart did not elicit a response. CAIT in its complaint to ED said that Flipkart in the guise of operating under a marketplace model is actively engaged in the inventory-based model of e-commerce.
“Their own admission before a tax authority shows that Flipkart is engaging in buying of goods which are ultimately sold on their platform. Flipkart tried to circumvent the law by routing the sales via their preferred sellers, who are their affiliates.
“It is a clear case of what they cannot do directly, they are doing it indirectly and this goes against the teeth of any law, including FDI policy and as such, Flipkart should liable,” the traders’ body said.
The FDI policy provides that an E-commerce entity providing a marketplace will not exercise ownership over the inventory — goods purported to be sold. CAIT further claimed that Flipkart is also actively involved in selling “Extended warranty” to customers directly.
“Flipkart (either directly or through companies over which they have control over/ownership stake in/ affiliate) is directly “selling a service” to customers directly in violation of the FDI Policy,” it added.