E-commerce Deep Discounting by Flipkart and Amazon Creates Grey Market Losses to National Exchequer

The Competition Commission of India (CCI) should halt the operations of e-commerce giants Flipkart and Amazon, according to the Confederation of All India Traders (CAIT) and the All India Mobile Retailers Association (AIMRA). They claim these companies engage in predatory pricing and excessive discounting, which harms the retail ecosystem. These practices allegedly lead to a grey market for mobile phones, resulting in tax evasion and losses for the government.

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CAIT and AIMRA have presented a white paper detailing the impact of Amazon and Flipkart on India's retail sector. The document accuses these companies of violating foreign direct investment (FDI) policies and other regulations. AIMRA also called for the suspension of Chinese mobile brands like OnePlus, iQOO, and Poco, alleging their collaboration with e-commerce platforms.

Allegations of Collusion

Praveen Khandelwal, BJP MP and CAIT Secretary General, stated that Flipkart and Amazon are heavily involved in practices like predatory pricing and loss funding. "They are using their investments to burn cash and fund losses in India," he said. Khandelwal suggested a possible cartel between e-commerce players, brands, and banks aimed at capturing the market.

During an AIMRA summit, there was a collective call for CCI to suspend Amazon and Flipkart's operations. Khandelwal emphasized that while they are not against e-commerce, they demand fair business practices and a level playing field for all retailers.

Impact on Mobile Phone Market

AIMRA Founder Kailash Lakhyani highlighted issues with deep discounting facilitated by some brands and banks in collaboration with e-commerce companies. He noted that consumers struggle to purchase discounted mobile phones as these are often bought by grey market operators. This situation not only affects consumers but also results in tax evasion.

Lakhyani further argued that Chinese brands like OnePlus, Poco, and iQOO should face operational suspensions for one to two years. He claimed these brands engage in trading without contributing value to India's economy.

Responses from Companies

When approached for comments, OnePlus chose not to respond, while Flipkart, Amazon, Poco, and iQOO did not provide any immediate replies. The allegations remain unaddressed by these companies as of now.

The concerns raised by CAIT and AIMRA reflect broader issues within India's retail sector. They stress the need for regulatory intervention to ensure fair competition and prevent market monopolization by large e-commerce entities.