The business organization is raising concerns over heavy discounts by e-commerce companies during festivals

An industry body, the Confederation of All India Traders (CAIT), has raised concerns over heavy discounts or cashbacks provided by e-commerce festive sales by companies that tend to monopolize the retail market, thereby limiting opportunities for small offline retailers.

The industry body has recommended suspension of sales of e-commerce festivals along with several other recommendations to ensure a level playing field for all players in the Indian retail ecosystem.

“Exclusive cashbacks are anti-competitive and encourage gray market operations. A ban would help restore fairness in the market,” the industry body said in its white paper.

She stressed, citing findings by the Competition Commission of India (CCI), that the cash burn and collusive affiliate strategies of e-commerce platforms enable them to monopolize markets by forming exclusive alliances with OEMs and banks.

“This anti-competitive behavior has forced customers to rely on e-commerce platforms, sidelining the traditional retail sector,” CAIT added in its article.

This also raised concerns by adding the issue of lack of price controls.

“E-commerce platforms, through exclusive contracts and cash-burning practices, sold high-value consumer electronics at prices below those available to retailers, harming the profitability of the retail sector,” the white paper added, citing CCI observations.

The industry body expressed further concerns, adding that e-commerce companies are abusing foreign direct investment (FDI) norms, as found in the CCI investigation.

As mentioned in the white paper, the CCI investigation found that foreign direct investment (FDI) was used to cover losses resulting from deep discounting and cash burn strategies, rather than contributing to economic growth.

It also highlighted that e-commerce companies benefit from loopholes in data privacy regulations that allow these platforms to manipulate consumer behavior.

CAIT, in its white paper prepared by the industry body in collaboration with All India Mobile Retailers Association (AIMRA), has recommended development of a robust policy framework to address regulatory loopholes. According to the industry body, a strong policy framework will ensure fair competition and protect consumers.

In her recommendations, she further added that a system for expedited handling of consumer complaints, led by an ombudsman, should be established.

The authority said this would prevent fraudulent practices and ensure timely intervention.

He also recommended discontinuing GST on B2C e-commerce transactions, adding that this would curb tax evasion and prevent loss of revenue.

Going forward, he recommended imposing a luxury tax on e-commerce, adding that a luxury tax on high-end products sold through e-commerce platforms would level the playing field for online and offline retailers.