India’s top internet firms Flipkart, Amazon, Snapdeal, among a number of others are in the process of submitting detailed reports to the Ministry of Commerce and Industry, explaining their company structures and business operations in India, multiple people with knowledge of the matter told ET.
This is the first such instance of the government seeking such a clarification on the way new-age internet companies function, and comes on the back of several complaints being made by seller bodies and other rival players about Internet commerce firms allegedly violating laws that govern the sector. The development also coincides with the Competition Commission of India (CCI) conducting a survey on the e-commerce market in India.
“The Ministry had asked for details on the company structure during our meeting with Piyush Goyal, which we have submitted,” said an executive of a leading e-commerce marketplace on the condition of anonymity. “We have also given other details in the report like how many warehouses we are running, the number of sellers we work with, and our other investments in India,” the person said.
ET has learnt that Flipkart and Snapdeal have already made their submissions, while Amazon is still in the process of doing so.
While Flipkart and Amazon declined to comment, a Snapdeal spokesperson confirmed that the e-tailer had already sent its report to the Ministry.
The Commerce and Industry Minister, Piyush Goyal met representatives of about 25 internet and e-commerce companies on June 24, including Reliance Jio, Paytm, Flipkart, Amazon, Snapdeal, Urban Ladder, Udaan, Jumbotail, IndiaMart, UrbanClap, Zomato, Swiggy and Shopclues. During the course of the meeting, the Minister instructed all the parties present to submit reports explaining their company structures and business models, people aware of the matter told ET.
“The Minister didn’t specify which companies need to comply with this demand, so we took a conservative approach and have sent a detailed report on our structure,” said another executive from a company which was present in the meeting with Goyal.
Goyal had added that the submissions should be made within a week, after which it would be analysed by his Ministry and presented to him before their next meeting.
“It’s a pretty simple submission for us as we have a single brand retail license in which 100% FDI is allowed through the automatic route,” said Ashish Goel, CEO of online furniture retailer Urban Ladder. “All the details are already present with the Reserve Bank of India and Commerce Ministry, but we will make our submission soon,“ Goel who was present at the meeting last month told ET.
Goyal has taken a tough stand against online retailers and during his meeting last month, questioned the likes of Flipkart on its structure, while asking others about how they were facilitating discounts, since FDI guidelines in the e-commerce sector prohibit marketplaces from influencing prices of products sold on their platforms. Press Note 2, which was notified in December 2018 by the Indian government, bars online marketplaces and their group companies from owning their vendors and prohibits them from controlling the inventory sold on their platforms.
Earlier in June, Goyal had stated at another meeting with global technology and e-commerce firms that the government would not allow 100% FDI in multi-brand retail as the interests of small traders and merchants in the country would be hurt.
Flipkart and Amazon have maintained that they are in complete compliance with the laws of India. ET reported on July 3 that Flipkart Group CEO Kalyan Krishnamurthy said the company was open to any audit by the company’s statutory auditors to check for compliance with requirements under Press Note 2. Walmart International president and CEO Judith McKenna along with Krishnamurthy met Piyush Goyal on Wednesday, with a tweet from the Minister’s office stating that they discussed local sourcing and boosting sales of Made in India products.