DPIIT received some complaints of ecomm firms offering deep discounts: Goyal

In a written reply to the Rajya Sabha, Commerce and Industry Minister Piyush Goyal said that any violation of foreign direct investment (FDI) regulations is covered by the penal provision of the Foreign Exchange Management Act (FEMA), 1999.

22nd Nov 2019
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The Department for Promotion of Industry and Internal Trade (DPIIT) has received complaints that ecommerce companies are offering deep discounts, indulging in predatory pricing, exercising control over inventory and influencing the prices of goods sold on the platform, Parliament was informed on Friday.


In a written reply to the Rajya Sabha, Commerce and Industry Minister Piyush Goyal said that any violation of foreign direct investment (FDI) regulations is covered by the penal provision of the Foreign Exchange Management Act (FEMA), 1999.


The Reserve Bank of India (RBI) administers the FEMA and Directorate of Enforcement is the authority for the enforcement of the act.


ecommerce



"Some representations have been received in this department complaining that ecommerce companies are offering deep discounts, indulging in predatory pricing, engaging in B2C business, exercising control over inventory and influencing the prices of goods sold on the platform," he said.


The onus of compliance of the provisions of FDI policy is on the investee entity. The policy is made legally enforceable through notifications under FEMA, 1999, by the RBI.


In a separate reply on onions, the minister informed that the prohibition on export of onions has been imposed in view of the prevailing adverse domestic availability and price situation.


"No report of adverse impact on onion growers in the country, particularly in Maharashtra, has been received in the ministry," he said.


Recently, ecommerce giants Amazon and Flipkart have also been asked to disclose names of the top five sellers on their platform, price list of goods of preferred vendors, and the kind of support provided to sellers, according to sources. DPIIT, in separate questionnaires to these companies, has also asked them to share their capital structure, business model and inventory management system.


These questions were sent to them after several complaints were made to the department by traders body CAIT that ecommerce companies have been violating the foreign direct investment policy in the garb of mega festive sales.


(Disclaimer: Additional background information has been added to this PTI copy for context)




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