In July, Flipkart CEO Kalyan Krishnamurthy reiterated the same and reportedly said that the company is ready to face any audit as per law.įollowing the Entrackr report, CAIT also sent a communication to Commerce and Industry Minister Piyush Goyal urging the government to order for the closure of Flipkart’s e-commerce business and constitute a high level committee of tax experts, chartered accountants and senior officials of the government to do an in-depth study of the balance sheet, income and expenditure accounts of Flipkart, its parent company and other associate or related companies in a time-bound manner.
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However, Flipkart has always maintained that it is in full compliance with India’s FDI norms. These intermediaries bought goods from Flipkart’s wholesale arm and sold them to the preferred sellers, who in turn retailed to consumers. Marketplace operators are also barred from selling products of any of their group companies.įlipkart is majorly owned by Walmart (77%) and also counts other foreign entities such as Japan-based SoftBank Group, China’s Tencent Holdings, New York-based Tiger Global, US private equity firm Accel Partners and US-based tech giants such as eBay, Microsoft as investors.Īs per an Economic Times report, right before the new FDI norms kicked in, in February 2019, Flipkart created a layer of B2B entities to act as intermediaries between its wholesale arm and many prominent sellers on its platform. It bars these entities from holding any inventory or stock or selling their own goods to customers.Īs per norms, if an online marketplace sources more than 25% of merchandise from any entity or seller related to it, that seller will be considered controlled by the marketplace. In India, marketplaces who have been funded through FDI are allowed to only make available their platform to third-party sellers. Several trader unions, especially the Confederation of All India Traders (CAIT) and Association of All India Online Vendors, have been fighting against Flipkart and Amazon for years now claiming that these e-commerce players flout FDI norms, indulge in predatory pricing, deep discounting and favour their own sellers, thus causing major losses to other sellers. A simple calculation shows that these goods were discounted by as much as Rs 1,643 crore.īut as Flipkart was buying more, it was also discounting more. Losses due to discounting increased by a massive 107% year-on-year during FY19, the Entrackr report states. In FY18, the figure for the cost of goods sold was Rs 26,876.50 crore, while these goods were sold for Rs 25,234 crore during the fiscal year that ended in March 2018.
It reportedly first sells products bought by it to these sellers, who then sell them on Flipkart.įlipkart has reportedly also recently set up some intermediary companies such as Sports Lifestyle Private Limited Premium Lifestyle and Fashion India Pvt Ltd and Wishberry Online Services Pvt Ltd, who, the report claims, buy from Flipkart’s B2B entity and then sell to sellers controlled by Flipkart.įlipkart has also reportedly been discounting more as it buys more goods. As per the Entrackr report, some of the sellers related to or controlled by Flipkart are SuperCom Net, OmniTech Retail and Retail Net.
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