CAIT requests PM Modi for fresh Press Note to block alleged FDI escape routes by e-commerce companies

Press Note 2 issued by DPIIT in December 2018 had noted that e-commerce marketplaces “will not mandate any seller to sell any product exclusively on its platform only.”

Ease of Doing Business for MSMEs: Traders’ body Confederation of All India Traders (CAIT) on Sunday sought Prime Minister Narendra Modi’s “immediate intervention” to streamline e-commerce rules and policies to “save the domestic trade from the clutches of malpractices of big e-commerce companies.” In a letter addressed to PM Modi, the federation alleged an unholy nexus between banks and e-commerce companies to violate the laws. It also accused marketplaces in the e-commerce sector, which is dominated by Amazon and Flipkart, for “openly violating the FDI policy, law and Rules without any fear of law by indulging into predatory pricing, deep discounting, loss funding, controlling inventory, sale of branded products exclusively on their respective portals which are specifically restricted Press Note 2 of FDI policy of the Government.”

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Press Note 2 issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in December 2018 had noted that e-commerce marketplaces “will not mandate any seller to sell any product exclusively on its platform only.” CAIT said that e-commerce companies have found various escape routes in Press Note No.2 of the FDI Policy and hence, requested PM Modi for “a fresh Press note blocking all escape routes and abolishing all such provisions that may prompt these companies to violate the rules or policies.” It also urged for having a regulatory authority to regulate and monitor the e-commerce business along with an e-commerce policy prescribing defined parameters for e-commerce business for structured growth of e-commerce vertical in the country.

The DPIIT had in December last year asked the Reserve Bank of India and Enforcement Directorate to take necessary action following CAIT’s allegations with respect to FDI and FEMA violations by Amazon and Flipkart. However, “no such investigation has been initiated by RBI or ED on the matter,” MoS Commerce and Industry Som Parkash had said in a written reply to a question in the Rajya Sabha last week.

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CAIT also urged PM Modi for ease in GST complexities. The federation, which represents 8.5 crore traders, said that over 950 amendments made by the GST Council in the past four years have made “GST as a more complicated tax system and the traders are subject to about 60 types of compliances.” The letter read that the principle of natural justice has been greatly violated through such amendments where the traders have been denied any sort of show cause notice or opportunity of hearing before taking any penal action.

CAIT suggested the formation of a ‘special working group’ at the Central level consisting of senior officials and representatives of CAIT and independent tax experts to review the GST Tax structure and make recommendations to the government for making it a ‘Good & Simple Tax’.  It also requested for a ‘District GST working Group’ of senior tax officials and representatives of CAIT in each district to monitor smooth GST implementation and taking steps for the widening of tax base and revenue augmentation in respective districts.

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