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The Union Commerce Ministry has reportedly requested the Enforcement Directorate (ED) and the Reserve Bank of India (RBI) to examine whether e-commerce firms like Flipkart, Amazon and Snapdeal have violated foreign direct investment (FDI) rules by engaging in business-to-consumers (B2C) activity.
The move follows a complaint filed by the Confederation of All India Traders (CAIT), which alleges that the e-commerce firms have circumvented FDI law by engaging in B2C activity, reports a business daily.
In its complaint, CAIT has stated that during their recently concluded mega sales Amazon, Flipkart and Snapdeal resorted to a massive advertisement campaign across print, electronic and social media.
“Since they have received foreign investment (FDI), they are allowed to undertake B2B e-commerce activity and not B2C," says CAIT.
"The advertisements tantamount to retail trading,” CAIT says in a letter to the Department of Industrial Policy & Promotion (DIPP) Secretary Amitabh Kant.
CAIT has requested to the Commerce ministry that the three online retailers should be restricted to conduct such sales in the future, and that they should be penalised for the violation of the Consolidated FDI Policy.
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