The industry body notes that allowing multinational ecommerce companies to buy directly from Indian sellers for exports will be detrimental to small businesses in India
The Confederation of All India Traders (CAIT) has objected to the reported draft proposal under consideration by the Centre that seeks to relax foreign investment rules. The proposed move is aimed at allowing ecommerce multinationals like Amazon to buy directly from Indian sellers for exports.
Cait National President BC Bhartia said that while this move is being projected as a step to boost Indian exports, the industry body firmly believes that such a proposal is both unnecessary and dangerous. “It carries grave risks of misuse, a backdoor entry into India’s domestic retail sector, and further marginalisation of the country’s nine crore small traders and crores of small industries,” he added.
Bhartia added that that Indian entrepreneurs are more than capable of taking Indian products to global markets on their own. All they need is a fair, transparent, and supportive policy environment. Allowing foreign ecommerce companies to directly purchase from Indian sellers under the pretext of exports would be tantamount to legitimising what they have been doing illegally, the industry body said.
“The so-called export facilitation entities mentioned in the draft are nothing but clever fronts to allow foreign ecommerce players deeper control over India’s supply chains, pricing, and market access,” Cait emphasised.
Past experience clearly shows that promises of strict penalties have failed, given the poor track record of enforcement against these companies, the industry body noted. Cait added that the move will create a slippery slope, making it nearly impossible to monitor whether goods are genuinely meant for exports or being diverted into the domestic market. bypassing FDI rules and further harming small retailers.
The draft proposal envisages a third-party export facilitation model, wherein the compliance would be managed by a dedicated export entity linked to ecommerce firms. The new rules would only be applicable to exports and any policy violations would result in stiff penalties along with criminal action.
The reports noted that India does not allow foreign ecommerce firms to sell goods directly to consumers either at home or overseas. The companies can only operate as a marketplace to connect the buyers and sellers for a fee. Amazon has been consistently lobbying the Centre to ease the rules, the reports added.
