Home Economy CAIT asks ED to take strict action against Amazon

CAIT asks ED to take strict action against Amazon

The Confederation of All India Traders has written to the Enforcement Directorate, with 'proof', demanding action against Amazon. It has been alleged that Amazon in India in 2012, has brazenly and flagrantly violated the laws, rules, and regulations of the country and has caused misery to crores of small traders (by resorting to predatory pricing) who are sought to be protected by the FDI Policy and the FEMA Rules and Regulations.

New Delhi, December 6, 2020 (IANS): The Confederation of All India Traders (CAIT ) has written to the Enforcement Directorate (ED) with all the necessary details to prove that since the beginning of Amazon in India in 2012, it has brazenly and flagrantly violated the laws, rules, and regulations of the country and has caused misery to crores of small traders (by resorting to predatory pricing) who are sought to be protected by the FDI Policy and the FEMA Rules and Regulations. Despite the constant violations, no action has been taken against the Amazon because of which the seven crore traders of the country along with the workers and people connected to them are feeling cheated and left out.

Taking into account the sentiments of Indian retailers and not to forget the amount of damage caused by the foreign E-commerce giants immediate and strict action is required and CAIT demands the ED to do the needful.

CAIT complain about action against Amazon:

CAIT national president B.C. Bhartia and secretary general Praveen Khandelwal said that in their complaint to ED, they have provided all the proofs and documents which clearly show how Amazon is operating in India with a hidden motive.

“We have also raised certain questions as to how Amazon through Amazon Seller Services Private Limited (Amazon India) and other owned subsidiaries and benames have been carrying on multi-brand retail trading (inventory-based model of e-commerce) in the garb of marketplace based model of e-commerce in complete violation of FDI Policy, Press Notes and FEMA Act, Rules and Regulations,” they added.

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Image- iStock

Direct violation by Amazon:

The simple and direct evidence of a violation is that by its own admission Amazon has invested $ 6 billion in Amazon India. Marketplace based model of e-commerce is nothing but the provision of an electronic platform for the buyers and sellers to transact.

“The e-commerce entity is allowed to provide attendant services so why does Amazon require so much money for this Marketplace based model of e-commerce? The fact is most of the money has been used to offer steep discounts on the products sold on the platform directly or indirectly through various methods and investigation should start from here,” CAIT said.

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Image- iStock

Also Read: CCI gives nod to Future-Reliance deal, setback for Amazon

Demand for immediate action against Amazon:

Bhartia and Khandelwal said, “We fail to understand why even after repeated exposure, not a single action is taken by the authorities. In our communication to ED we have highlighted how Amazon has invested in More Retail Limited, an MBRT Company and has put up a Front, namely, Samara AIF, not only this, how the AIF structure which has been allowed by SEBI for the purpose of pooling of money of investors for financial investment and returns have been misused to control MBRT companies which could not have been otherwise done by Amazon. It is an open fact that by shareholders’ agreements, Amazon is exercising control over More Retail Limited. The shareholders’ agreements have never been disclosed to the Department for Promotion of Industry and Internal Trade or ED or RBI or to any other authority.”

They added how the Control Rights of Amazon over More Retail Limited have never been publicly disclosed to the Department for Promotion of Industry and Internal Trade or ED and why there is complete non-transparency as to who are the real investors in Samara AIF, their identities are not known to any regulator in India and above all how Amazon is illegally carrying on Inventory based model of e-commerce openly.

 It is trite in law that what cannot be done directly cannot be done indirectly. When FEMA Regulations provide FDI prohibited in Inventory based models of e-commerce, Amazon cannot do it in an indirect manner.

‘Proof’ of violations:

“The very fact that the government has been forced to impose more and more restrictions is proof of the violations committed. No more proof is required. ED should immediately call for all documents and agreements from Amazon. ED, CCI, and the Department for Promotion of Industry and Internal Trade should examine the same and punish Amazon for all the transgressions by imposing a maximum penalty that is, three times the value of the illegal investments of Rs 48,500 crore –- a penalty of Rs 1,44,500 crores must be imposed. Multinational corporations like Amazon, who think that they are above law, should not be left unpunished,” they added.

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