There are days when online and offline retail work in perfect harmony. And then there are days when accusations and legal threats are thrown in, which shows the ugly side of fierce competition in the retail industry.
The latest brewing trouble between traditional and online retail is the lawsuit filed by the All-India Footwear Manufacturers and Retailers Association (AIFMRA) that have accused ecommerce companies of breaking the country’s FDI rules.
This IOS article reported how AIFMRA isn’t happy with online marketplaces, and complained about the same to the Delhi High Court by filing a lawsuit. Its main grouse – ecommerce biggies Flipkart, Snapdeal, Jabong are violating FDI rules and government should stop them.
“These entities are evading the law by creating a complex and convoluted business structure by creating a facade of a ‘marketplace’ model,” AIFMRA lawsuit stated.
The court has instructed government of India to file a report and counter affidavit by December 21, which is a mere few weeks away.
The various retail associations are miffed by online marketplaces and international retail brands. But the commerce ministry is concerned about removing such legal hassles so that nothing stops the ‘modernising India’ plan. Rightly so, because why would any foreign company invest in the Indian retail industry, if there are legal uncertainties?
One such indicator of the government’s aim to make India a ‘business-friendly’ country and improve ‘ease of doing business’ ranking, was when the it allowed single-brand retailers with FDI to sell online.
“We want these industries to flourish. We will not allow them to fail”, said Amitabh Kant, Secretary, Department of Industrial Policy and Promotion (DIPP) – Government of India.
As Mr. Kant from the commerce ministry stated, the government wants ecommerce companies and upcoming foreign retail brands to function smoothly. And hence it seems, in AIFMRA VS Online Marketplaces legal battle, the government is going to back etailers, ET reports.
DIPP feels ecommerce companies are not violating any FDI rules as accused by AIFMRA.
Since the petition was filed, the government conducted series of dialogues between online and offline retailers in order to find a satisfactory solution. It’s a sticky situation as both – home-grown retail and foreign investment is important for a healthy economy.
Let’s wait for December 21st, to find out what happens next.
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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