New Delhi: Confederation of All India Traders called for a probe in the business model and trade practices of e-commerce companies to find out how they are offering huge discounts during the ongoing festive season.
"How can the marketplace model companies can offer 'big sale' - Diwali Sale - when they are not the owners of the inventory," a CAIT release said.
"Certainly, there is some fishy which is hidden behind the scene and which needs to be unearthed to provide fair play and competition," it said.
In a communication sent today to Commerce Minister Nirmala Sitharaman, the CAIT has demanded a thorough probe in to the working and business model of e-commerce companies. It has demanded setting up of a special task force of experts to conduct an in depth probe of working of such companies.
The traders' body has sought the investigation as to how the e-commerce companies are able to sell "same brand and quality of goods much cheaper than brick-and-mortar shops".
It further said that if required, the body may lodge a complaint with Competition Commission of India, alleging that the online business is "indulging into unfair competition practices".
The body has also raised a question of "diversion of VAT tax" by these companies which is causing great revenue loss to the state governments.
It has asked the central government to set up a regulatory authority to regulate and monitor the e-commerce business in the country.
In a joint statement, CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said that recently big advertisements appeared in newspapers for "big sale" by e-commerce companies.
Such companies, they said, pretend to be a marketplace. In such model, the e-commerce companies are merely providing technology platform and ownership of the products lies with sellers registered on such marketplace platform.
