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Domestic ecommerce cos against FDI policy deadline extension; NCLAT reserves judgment on CAIT petition against Flipkart-Walmart

Domestic e-commerce firms Snapdeal, Shopclues, Shop101 and others have written to the Department of Industrial Planning and Policy (DIPP) and the Commerce Minister Suresh Prabhu opposing the deadline extension of February 1, when the new FDI in e-commerce policy comes into effect. This was reported by the Economic Times. According to the report, industry officials have told ET that the government was looking at a possible extension of 2 months.

The companies have also supported the government for clarifying the rules on FDI in e-commerce. Small online sellers like Limeroad, Wooplr, and Fynd have also written to the ministry, raising concerns over any deadline extension.

The FDI in e-commerce policy disallows e-commerce players to control inventory of the vendors. Additionally, vendors which are owned and controlled by the e-commerce company cannot trade on the marketplace. The policy will impact global e-commerce players like Walmart-owned Flipkart and Amazon, who would have to change their business structures to comply with the new policy, which was announced late in December.

Traders’ bodies have opposed deadline extension

Traders’ bodies CAIT and Swadeshi Jagran Manch have voiced their opposition against any deferral of the deadline.

  • Earlier this month, Amazon and Flipkart asked that the deadline be extended by 4 and 6 months respectively, leading to traders’ opposition.
  • It was reported last week that the US government has voiced its concerns over the new regulations to Indian government officials, and was pushing for the regulation to become a bilateral issue between US and India.

Immediately after, CAIT wrote to PM Narendra Modi against any deadline deferral, and urged him and Prabhu not to give in to the “pressure tactics” of global e-commerce companies. CAIT said that the new rules would enable “crores of families who have been adversely impacted economically” to return to business in a “fair environment.”

NCLAT judgment on CAIT’s petition against the Flipkart-Walmart deal

Last week, the National Company Law Appellate Tribunal (NCLAT) concluded hearing and reserved judgment [pdf] in the CAIT petition against the CCI approval of Walmart’s acquisition of Flipkart. A two-member bench of the tribunal consisting of Justices SK Mukhopadhaya and Bansi Lal Bhat concluded the hearing after noting submissions from both CCI and CAIT.

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  • Late in August 2018, the CAIT had appealed to the NCLAT, the appellate body for India’s anti-trust regulator CCI, asking for reversal of the Flipkart-Walmart deal. In August last year, the CCI gave a go ahead to Walmart’s acquisition of a 77% stake in Flipkart for $16 billion. CAIT appealed that the deal would lead to capture of the retail market by Walmart-Flipkart, owing to their predatory pricing and deep discounting structures.
  • Soon after, CAIT also appealed the Delhi HC asking that Flipkart’s business model be investigated, claiming that it harmed small sellers on the platform.
  • CAIT had opposed the deal in May (before it was approved), and filed a petition with the CCI saying that Walmart will create unfair competition, uneven the existing level playing field and indulge in predatory pricing, deep discounts and loss funding.

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