E-commerce websites are doing business through the Internet as online stores in complete violation of the consolidated FDI policy of 2015.
It became effective from May 12, as also the Foreign Exchange Management Act 1999, and the Foreign Exchange Mangement (Transfer or Issue of Security by persons Resident Outside India) Regulation 2000, among others.
These entities are evading the law by creating a complex and convoluted business structure by creating a faÃ§ade of a market place model.
Over the past few years, retailers have repeatedly asked the government to create a simple FDI policy without segregation by brands and channels.
Major ecommerce players like Flipkart, Snapdeal and Amazon.in have made good inroads into the countryâ€™s retailing business by offering huge discounts, which impacted sales of brick-and-mortar retailers.
While India bars FDI in e-commerce firms that sell products directly to consumers, foreign companies are allowed to operate online marketplaces that offer a platform for sale of global brands, putting them at a disadvantage.
Accusing the government of turning a blind eye towards e-commerce websites that have started wiping out the market by eliminating small shop owners especially in the footwear market, the petition stated that discounts offered by online players have cut into their sales and, thus FDI illegally gotten by the e-commerce entities is being misused by them through their websites to wrap the level playing field.
According to the association, though its members are liable to pay sales tax, there is an artificial exemption being enjoyed by e-commerce entities.
The valuation of these e-commerce websites being manifold, the investment into them despite losses shows that there is a clear financial bungling of the e-commerce entities which calls for an in depth and a forensic investigation into their working.