E-comm deep discounting creating gray mkt, leading to losses to national exchequer: CAIT, AIMRA, ET Retail

The Competition Commission of India (CCI) should immediately suspend operations of e-commerce companies Flipkart and Amazon as they are engaging in predatory pricing and are burning cash to offer heavy discounts on products, traders’ body CAIT and mainline mobile retailers’ association AIMRA said on Tuesday. These practices, in turn, are creating a gray market of mobile phones, causing losses to the exchequer “as players in the gray market evade taxes,” they said.

Confederation of All India Traders (CAIT), in collaboration with the All India Mobile Retailers’ Association (AIMRA), placed the demands in a white paper on the impact of e-commerce giants Amazon and Flipkart on India’s retail ecosystem.

AIMRA demanded suspension of operations of Chinese mobile phone companies OnePlus, iQOO, and Poco for allegedly colluding with e-commerce players.

The white paper alleged violations of foreign direct investment (FDI) policy and other regulatory frameworks by Flipkart and Amazon.

“They (Flipkart and Amazon) deeply indulge in predatory pricing, deep discounting, loss funding, etc. Whatever investment they are bringing that is being used to burn cash, to fund losses they accrue during their operations in India,” BJP MP and CAIT Secretary General Praveen Khandelwal, said.

Speaking at a summit organized by AIMRA, Khandelwal said, “It looks like there is a cartel between e-commerce players, the brands, and the banks. They are hand-in-gloves to capture the market by various means but mainline retailers will not allow this to happen. We are not against e-commerce but we want a level-playing field and fair means of doing business.”

At the summit, there was a unanimous demand that the “CCI should immediately suspend operations of Amazon and Flipkart and the allied companies which are helping both these companies to capture the market.”

When contacted, OnePlus declined to comment on the matter, while Flipkart, Amazon, Poco, and iQOO did not share any immediate response.

AIMRA Founder and Chairman Kailash Lakhyani said some of the brands and banks are colluding with e-commerce companies for deep discounting.

“Customers are not being able to buy mobile phones that come at heavily discounted price, as these are purchased by the gray market. These (gray market purchases) can easily be tracked with the help of IMEI… It is also a loss for the government as gray market players evade taxes,” he said.

Operations of Chinese brands such as OnePlus, Poco, and iQOO should be suspended for at least 1-2 years as they are engaging in trading activities without any value addition to the Indian economy, Lakhyani added.