CAIT launches scathing criticism against FDI policy

CAIT Secretary General Praveen Khandelwal said the government policy in question has no clear definition of a group company, gadgets.ndtv.com reports. He further comments:

At times, the Companies Act definition of Group Co is used. I believe with such definition entities like Cloudtail, which is a JV between Narayana Murthys investment Co and Amazon, is not a group company of Amazon (this co sells more than 40% of Amazon India sales).

Cloudtail actually is a listed retailer on Amazon having investment of Amazon and keeps inventory of the retail activity with some convoluted logic., the source cites.

According to the DIPP (Department of Industrial Policy & Promotion, established in the wake of the economic liberalisation of India to regulate and administer the industrial sector) Circular, online marketplaces are barred from inventory-based model. Sales of a single retailer or a group company cannot exceed 25% of total sales of the ecommerce company.

The most important part of the notification is that, while DIPP makes rules, there is no authority to check whether any violations are taking place. There is also no forum to which a small retailer can complain, CAIT Secretary General Praveen Khandelwal said.