‘FDI in E-com facilitates mass-scale dumping of products to India’

Dumping happens when prices are artificially lowered by accessing funds from overseas sources, says Confederation of All India Traders

By Sai Nikesh D

In a step-ahead move to address the concerns of Indian retailers -online and offline, the Ministry of Commerce, Government of India, on July 11, 2015, convened a meeting that was chaired by Amitabh Kant, Secretary, Department of Industrial Policy and Promotion (DIPP).

Discussion on 100% FDI allowance in e-commerce sector, ‘Ease of doing business’, clarity on taxation, were among other key issues discussed in the meeting.

On outcomes of the meet, Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT), said, “All the concerns raised by trade bodies and e-commerce players were received positively…Since the matter on ‘FDI in e-Commerce’ is contentious, it has been announced that the Commerce Minister will be holding a high-level discussion with representatives from all the States’ departments on July 15.”

In the meeting, the CAIT urged the government not to make Indian retail market as e-commerce dumping yard by allowing FDI in e-Commerce sector, he added.

Further stating that ‘dumping happens when prices are artificially lowered by accessing funds from overseas sources,’ he said, “Currently, under e-Commerce business in India, the e-retailers are selling products much below the actual price of the manufacturer. This is possible only because of funding received from overseas. This is nothing but e-Commerce dumping.”

So, FDI in e-Commerce will facilitate mass scale dumping of products from over the globe to India, he noted.
Though 100% FDI is allowed in retail in B2B model, the e-retailers are openly circumventing the norms and indulging in B2C model which is creating an uneven level playing, he added.

He went on to say that ‘while the finance is available at interest rates ranging from 1.5% to maximum 3% in the foreign countries, in India, the corresponding interest rate varies from 12% to 20% and more’.

FDI funding with such a big margin of interest rate is quite sufficient to monopolise the market, he pointed out.

He said, “Before giving any shape to FDI policy in e-Commerce/Retail, an impact assessment on various stakeholders has to be made in great detail.”

On the whole, the CAIT has opposed entry of FDI in any segment of retail and has urged the government to frame a National Trade Policy for retail trade to provide better business opportunities to Indian retail sector, besides advocating formation of specified policy & guidelines for Indian e-Commerce sector, he added.

This article was published in The Dollar Business on July 11, 2015

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