Business

Doesn’t Look, Feel, Smell Right When Etailer Makes Rs 6,000 Crore Loss On Rs 5,000 Turnover: Goyal

Doesn't Look, Feel, Smell Right When Etailer Makes Rs 6,000 Crore Loss On Rs 5,000 Turnover: Goyal 1

New Delhi, Benglauru, NFAPost News Service: In a clear stand against growing hold of ecommerce companies in India, Commerce and Industry Minister Piyush Goyal on Thursday asked ecommerce players to strictly adhere to FDI norms.

“Certainly does not look and feel and smell right” when a company makes a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore,” said Commerce and Industry Minister Piyush Goyal.

Commerce and Industry Minister Piyush Goyal also made earlier a lambasting comment at ecommerce giant Amazon stating the company was not doing any favour to India by announcing  $1 billion investment in the country as they are financing their losses,.

He also had stated that neither the Competition Commission of India (CCI) nor his Commerce and Industry would have to probe on fair trade practices if ecommerce players can stick within the letter and spirit of the law.

“India would welcome ecommerce companies to work within the framework and the laws of the land. I had before me the CCI’s preliminary findings. Our own office is also making queries on the various practices and I do hope and believe that if everybody can stick within the letter and spirit of the law, we won’t have to go down the path of finding whether anybody is breaking the law or not but whoever makes losses will have to bring in FDI to pay for those losses,” he said.

He appealed to all stakeholders in the e-commerce industry to work within the letter and the spirit of the law and said he is \sure it would look good for everybody.

“Promises of a certain number of people benefitting from e-commerce are very attractive, but it cannot be at the cost of a ’10X’ number of people suffering the consequences of practices which are not allowed and certainly a trillion dollar company, competing with small retailers whose total capital may be a lakh of two lakhs of rupees is a very, very unfair competition,” he said.

Commerce and Industry Minister Piyush Goyal said it is the government’s job and duty to protect the interests of every small stakeholder in the sector.

The government allowed foreign direct investment (FDI) in e-commerce for marketplace model, in which a firm is supposed to work as an agnostic platform by providing buyers and sellers, an opportunity to transact on that platform, stated Commerce and Industry Minister Piyush Goyal .

“The platform cannot have a preferred supplier, it cannot determine the pricing, the platform cannot have control on the inventory, a platform cannot push buyers to sell and in that context, when a certain e-commerce company makes a loss of lets say over Rs 6,000 crore on a turnover of Rs 5,000 crore. Right. It certainly doesn’t look and feel and smell right. Right? Very clearly a platform which has to be agnostic and encourage buyers and sellers to participate in a fair trade, cannot make a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore,” said Commerce and Industry Minister Piyush Goyal.

Goyal said obviously if the company makes a loss of Rs 6,000 crore, they have to bring in money to pay for that loss. He also said that  is the context in which he had made the statement on January 16.

He also said that the ecommerce policy very categorically has allowed only business-to-business transaction, so online retailers were never expected to be a let’s say a hidden way or a surreptitious way to enter multi-brand retailing.

Domestic traders apex body CAIT has time and again alleged that e-commerce players, including the US firm, were violating FDI rules and following predatory pricing in India.

CAIT on Thursday sent a communication  to US President Donald Trump seeking an audience with him during his forthcoming visit to India.  CAIT Secretary General Praveen Khandelwal said that besides sending a communication to Trump, the CAIT has also sent communication to Union Commerce Minister Piyush Goyal, Foreign Minister S.Jaishankar, Kenneth Ian Juster, US Ambassador in India and Taranjit Singh Sandhu, Indian Ambassador in US requesting them to facilitate a meeting of CAIT delegation with US President Mr. Donald Trump.

In its communication to Trump, the CAIT said that Indian traders delighted towards his forthcoming visit to India . The CAIT added that 70 million SMEs in India are considered to be the backbone of Indian economy and a preferential sector, not only providing employment to about 450 million people but the sector also generates an annual business turnover of about 650 billion US dollars and therefore it will be in fitness of things if a Indo US SMEs Business Corridor is facilitated under the broad policy guidelines of the Government of India.

India does not allow foreign investment beyond 49% in multi-brand retailing and has not yet approved any application of overseas retailers. On January 17, the world’s largest online shopping platform Amazon announced plans to create one million new jobs in India over the next five years.

Amazon founder and CEO Jeff Bezos, who was in India that month, had announced USD 1 billion (over Rs 7,000 crore) investment in the country to help bring small and medium businesses online and committed to exporting USD 10 billion worth of India-made goods by 2025.

 

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