Merchants’ physique CAIT on Thursday urged the federal government to analyze the “blatant” violation of FDI and taxation guidelines by e-commerce main Flipkart, alleging that the Walmart-owned agency had “creatively” restructured its enterprise mannequin to train management over stock and retail costs.
Flipkart was violating FDI coverage “by creatively structuring its market enterprise mannequin and making a facade in an effort to train management over stock and retail costs, a observe expressly prohibited by the FDI Coverage on e-commerce”, CAIT stated in a letter to Commerce and Trade Minister Piyush Goyal.
This warrants a direct investigation and strict motion from the Indian authorities, together with tax authorities, Confederation of All India Traders (CAIT) added.
When contacted, a Flipkart spokesperson stated as a market, Flipkart’s endeavour has at all times been to make use of know-how and innovation to facilitate the shopping for and promoting between lakhs of native sellers/MSMEs and over 300 million clients in a clear and environment friendly method.
“We’ll proceed to function with the identical transparency, and in step with India’s FDI and regulatory framework, whereas creating new livelihood alternatives and jobs…With greater than 3 lakh sellers on the Flipkart Market, our vendor companions are an integral a part of the ecosystem,” the spokesperson stated.
In 2018, Walmart Inc had invested USD 16 billion for buying a 77 per cent stake in Flipkart. Final yr, the US retail big led a USD 1.2 billion funding spherical within the Indian e-commerce firm.
CAIT famous that in 2019, Flipkart had created a two-tier mannequin consisting of ADs and Diamond Sellers (DSs) and that at present, there are 20 DSs and 10 ADs in place.
These 30 entities had been created for the only real goal of granting management of stock and costs to Flipkart, and to “act as an eye-wash and (to) distract the federal government from paying attention to the wholly unlawful actions” being undertaken by Flipkart and these entities, it alleged.
CAIT alleged that the ADs and DSs exist just for GST compliance and to service their association with Flipkart and cede management for a minuscule price.
“Flipkart has created a system of surrogate enterprise companions with the only real intention of bypassing the FDI Coverage and destroying the very traders the coverage goals to guard.
On behalf of over 8 crore merchants, we’re writing to you to provoke a direct inquiry and investigation into the wholly unlawful enterprise practices of Flipkart and its violations of the FDI Coverage, GST, Earnings Tax and extra severe cash laundering issues, earlier than it wreaks havoc within the lives of our members, their households and the general retail business,” it stated within the letter.