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The Confederation of All India Traders (CAIT) and the All India Mobile Retailers' Association (AIMRA) have launched a scathing attack on e-commerce giants Flipkart and Amazon, accusing them of engaging in predatory pricing practices that are creating a thriving grey market for mobile phones and leading to significant tax losses for the Indian government. In a white paper outlining their concerns, the traders' bodies have called for the immediate suspension of operations for both companies, citing violations of foreign direct investment (FDI) policy and other regulatory frameworks.
The crux of their argument lies in the deep discounts offered by Flipkart and Amazon, which they claim are fueled by the companies' burning of cash to secure market dominance. This aggressive discounting strategy, they argue, has created a situation where legitimate retailers are unable to compete, pushing customers towards the grey market where products are sold at heavily discounted prices, often without paying taxes. The white paper alleges a cartel-like arrangement between e-commerce players, brands, and banks, where all parties are working together to capture market share through unfair means.
The allegations are particularly severe against Chinese mobile phone brands OnePlus, iQOO, and Poco, which AIMRA accuses of colluding with e-commerce giants. The association has demanded a suspension of their operations for at least one to two years, arguing that they are engaging in trading activities without contributing to the Indian economy. The impact of this alleged grey market activity is not limited to lost revenue for legitimate retailers; it also poses a significant threat to the Indian government's tax collection efforts. The inability to track transactions and the lack of transparency in the grey market make it a haven for tax evasion.
While Flipkart, Amazon, OnePlus, iQOO, and Poco have yet to respond to the allegations, the case highlights a growing concern in India about the impact of e-commerce on the country's retail ecosystem. The debate centers around the balance between promoting competition and innovation in the digital marketplace while ensuring a level playing field for traditional retailers and protecting the interests of the government and consumers. The Competition Commission of India (CCI) is likely to be under intense scrutiny as it weighs the implications of these allegations and considers potential regulatory actions to address the concerns raised by CAIT and AIMRA.
Source: E-comm Discounts: Grey Market, Tax Losses - CAIT, AIMRA