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<\/p>\nNew Delhi: The Delhi High Court has issued notices to e-commerce giants Flipkart and Amazon for violating FDI norms after a\u00a0PIL filed by NGO Telecom Watchdog. The PIL alleged that both have been openly violating FDI norms for marketplace model of e-commerce and circumventing them by routing hot-selling products at much cheaper rates through proxy \u201cControlled Sellers\u201d or \u201cName Lenders\u201d and pushing out small sellers and brick-and-mortar retailers.<\/p>\n
A bench of Acting Chief Justice Gita Mittal and Justice C Hari Shankar issued notices to the Centre, Amazon and Flipkart seeking their response by November 11 to the plea which has sought legal proceedings against the two under the Foreign Exchange Management Act (FEMA),\u00a0reports\u00a0ET. According to Press Note 3 of 2016, which regulates FDI in e-commerce, entities like Amazon and Flipkart are not to exercise ownership over the stock, nor directly or indirectly influence the price of goods and services sold on their marketplace.<\/p>\n
For uninitiated, Press note 3 says that 100 per cent FDI is only allowed under automatic route, only if the companies are engaged in B2B sales, but is not applicable to B2C transactions. As per the guidelines, e-commerce firms can function as a marketplace to connect buyers and sellers, and not influence prices. However, exchange offers, EMI costs, and bank offers are funded completely or substantially by Amazon and Flipkart and constitute a clear influence on price in violation of FDI norms, the PIL added.<\/p>\n
Besides,\u00a0both parties\u00a0involve various intermediaries\/support entities in the chain to divide discounts\/losses which deserts\u00a0smaller sellers to participate in the fast-growing e-commerce sector. Giving an example of Cloudtail, the largest seller on Amazon, the PIL alleged that it buys goods in bulk from many manufacturers and sell them on the online platform of Amazon Seller.<\/p>\n
This is not the first time when both e-commerce behemoths come under FDI scanner. In April, this year,\u00a0Indian Cellular Association (ICA) and Retailers Association of India (RIA) had raised the\u00a0issue of FDI rules violations\u00a0by the online marketplace platforms. At that time, they approached \u00a0Commerce Minister Suresh Prabhu and complained that these marketplace models have been operating against the spirit of the policy.<\/p>\n","protected":false},"excerpt":{"rendered":"
New Delhi: The Delhi High Court has issued notices to e-commerce giants Flipkart and Amazon for violating FDI norms after a\u00a0PIL filed by NGO Telecom Watchdog. The PIL alleged that both have been openly violating FDI norms for marketplace model of e-commerce and circumventing them by routing hot-selling products at much cheaper rates through proxy […]<\/p>\n","protected":false},"author":1,"featured_media":53455,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[43032],"tags":[43037,6037,43034,43036,43033,43035],"class_list":["post-53454","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-law-news","tag-amazon","tag-fdi","tag-fdi-scanner","tag-flipkart","tag-indian-cellular-association-ica-and-retailers-association-of-india-ria","tag-press-note-3-of-2016"],"yoast_head":"\n