Deep discounting in e-commerce creates a gray market, leading to a loss for the treasury: CAIT, AIMRA, ET BrandEquity

Representative

The Competition Commission of India (CCI) should immediately suspend the operations of e-commerce companies Flipkart and Amazon as they use predatory pricing and waste cash to offer high discounts on products, traders body CAIT and major mobile sellers association AIMRA have said. on Tuesday. These practices, in turn, create a gray market for mobile phones, causing losses to the treasury “as gray market operators avoid paying taxes,” they said.

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

AIMRA has demanded suspension of operations of Chinese mobile phone makers OnePlus, iQOO and Poco over alleged collusion with e-commerce players.

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

“They (Flipkart and Amazon) are deeply indulging in predatory pricing, deep discounting, loss financing etc. Whatever investment they bring in is used to burn cash and finance the losses they have incurred during their operations in India,” the BJP and CAIT MP said general secretary Praveen Khandelwal.

Speaking at a summit organized by AIMRA, Khandelwal said, “There seems to be a cartel between e-commerce players, brands and banks. They work hand in hand to capture the market in different ways, but the major retailers will do it. We don’t let this happen. We are not against e-commerce, but we want a level playing field and fair ways of doing business.”

The summit unanimously demanded that “CCI should immediately suspend the operations of Amazon and Flipkart and allied companies that are helping both these companies conquer the market.”

OnePlus was contacted and declined to comment on the matter, while Flipkart, Amazon, Poco and iQOO did not respond immediately.

AIMRA founder and president Kailash Lakhyani said some brands and banks are partnering with e-commerce companies to get big discounts.

“Customers cannot buy mobile phones at heavily discounted prices because they are purchased on the gray market. These (gray market purchases) can be easily tracked through IMEI… It is also a loss for the government while gray market players evade taxes,” he said.

The operations of Chinese brands such as OnePlus, Poco and iQOO should be suspended for at least 1-2 years as they are engaged in commercial activities that do not add any value to the Indian economy, Lakhyani added.