CAIT Alleges Flipkart Restructured Biz Model To Exercise Control Over Inventory, Retail Prices

• ByStartupStory     |    May 23, 2021

CAIT alleges Flipkart had “creatively” restructured its business model to exercise control over inventory and retail prices. Traders’ body Confederation of All India Traders (CAIT) on Thursday urged the government to investigate the “blatant” violation of FDI

CAIT alleges Flipkart was violating FDI policy “by creatively structuring its marketplace business model and creating a facade in order to exercise control over inventory and retail prices, a practice expressly prohibited by the FDI Policy on ecommerce”, CAIT said in a letter to Piyush Goyal.

“We will continue to operate with the same transparency, and in line with India’s FDI and regulatory framework, while creating new livelihood opportunities and jobs…With more than 3 lakh sellers on the Flipkart Marketplace, our seller partners are an integral part of the ecosystem,”  a Flipkart  spokesperson said regarding CAIT alleges Flipkart .

CAIT noted that in 2019, Flipkart had created a two-tier model consisting of ADs and Diamond Sellers (DSs) and that currently, there are 20 DSs and 10 ADs in place.

These 30 entities were created for the sole purpose of granting control of inventory and prices to Flipkart, and to “act as an eye-wash and (to) distract the government from taking note of the wholly illegal activities” being undertaken by Flipkart and these entities, it alleged.

CAIT alleges Flipkart, the ADs and DSs exist only for GST compliance and to service their arrangement with Flipkart and cede control for a minuscule cost.

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