Traders body and pressure group CAIT has once again urged the Commerce Ministry to intervene in an e-commerce deal, citing violations of India’s FDI regulations. This time, the Confederation of all India Traders has taken issue with Aditya Birla Fashion Retail’s sale of a 7.8% stake to the Flipkart Group for ₹1,500 crore. Announced on October 23, the ABFRL said part of the deal is to further extend existing B2B arrangements with Flipkart India Private Ltd, by entering into a “commercial agreement in relation to sale and distribution of various brands of the company”. This has irked CAIT, which said this is a “clear intent” to make ABFRL a preferred seller on Flipkart’s marketplaces, which strictly violates government policy. “The FDI policy clearly prohibits foreign company to venture in any forms of multi-brand retail trading including through e-commerce by having an equity interest in the sellers on the market-platform, or directly/indirectly controlling their inventory through side agreements, or under the garb of B2B e-commerce,” CAIT said in a public letter to Piyush Goyal, whose ministry oversees foreign investments. India’s FDI policy for e-commerce, the latest version of which is Press Note 2 (2018), allows 100% FDI in B2B ecommerce, i.e. the marketplace model. However, e-commerce companies operating marketplaces have to meet certain conditions. Among other things, they cannot exercise ownership over any inventory sold on their marketplace, or influence the sale of goods directly or indirectly. Any seller in which the marketplace itself has an equity stake cannot sell in…
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