Ecommerce firms, including Amazon and Flipkart, are facing increased pressure from their brick-and-mortar competitors. Trade body Confederation of All India Traders (CAIT) has urged Prime Minister Narendra Modi to form a group of ministers (GoM) to probe what they call "unholy nexus" between e-commerce companies and banks, media reports say.
The demand is likely to roil the e-commerce segment further on the heels of allegations of market-distorting deep discounts and predatory pricing by online firms and preferential treatment by manufacturers.
Various types of discounts
The e-commerce firms had achieved record sales with their festival season-opening offers amid a worsening economic slowdown. Brick-and-mortar retailers have called for an inquiry by the Competition Commission of India into the sales of online retailers, claiming malpractices. Union Commerce Minister Piyush Goyal earlier said the government was looking into alleged predatory pricing by Walmart-owned Flipkart and Amazon.
It is apparent that these brand-owning companies are also exploiting the offline market ..."
CAIT secretary general Praveen Khandelwal criticised the banks for facilitating cash-back deals and various types of discounts for purchases on e-commerce portals, according to an Economic Times report.
CAIT said in a statement that apart from e-commerce giants Amazon and Flipkart, a large number of companies owning brands, particularly in mobile, FMCG, electronics, electrical appliances, footwear, garments and other sectors, and various banks were also responsible for the distortion in prices.
Cash-back and discounts
"It is apparent that these brand-owning companies are also exploiting the offline market, being hand in glove with e-commerce companies having separate price policy for both online and offline market, which is a clear violation of the Competition Act," the statement said.
The easy cash-back facilities and large discounts available for online purchases using credit and debit cards of various banks also affected the market, according to the trade body. CAIT said the "vicious nexus" of brands, banks and other service providers were unduly benefiting the e-commerce market and creating an uneven playing-field contrary to both the FDI policy and the Competition Act.
Khandelwal said CAIT representatives planned to meet Commerce Minister Goyal, Finance Minister Sitharaman and RBI Governor Shaktikanta Das seeking urgent action and demanding justice. The trade body leaders are also planning to seek an appointment with Prime Minister Modi to apprise him of the "unholy nexus" and seek remedial measures.