CAIT seeks ban on Amazon after report of avoided Indian regulators

The Confederation of All India Traders (CAIT) has urged the government to ban Amazon's local operations after a report revealed the company's strategy to circumvent foreign investment regulations. Amazon gave preferential treatment to a group of small traders on its platform, as per the Reuters report.

Amazon has for years given preferential treatment to a small group of sellers on its India platform, publicly misrepresented its ties with the sellers and used them to get around foreign investment rules affecting e-commerce, Reuters reported. Amazon said it doesn't give preferential treatment to any seller on its marketplace and it has always complied with the law in India.

The report said, based on internal Amazon documents dated between 2012 and 2019, provided an inside look at the cat-and-mouse game Amazon has played with India's government, adjusting its corporate structures each time the government imposed new restrictions aimed at protecting small traders.

In a statement, the Confederation of All India Traders (CAIT), which says it represents 80 million retail stores in India, said "the shocking revelations" in the Reuters story are "sufficient enough to immediately ban operations of Amazon in India."

The group has reached to the Commerce Minister Piyush Goyal to take immediate note of this "important and burning issue and order for a ban on operations of Amazon in India."

Amazon did not respond to a request for comment on the trader group's statement. But shortly after CAIT issued its call for the ban, Amazon retweeted the Reuters report, criticizing it as "unsubstantiated, incomplete, factually incorrect," without going into specifics. It added that "Amazon remains compliant with Indian laws."

"In last several years, there have been (a) number of changes in regulations; Amazon has on each occasion taken rapid action to ensure compliance. The story therefore seems to have outdated information and doesn't show any non-compliance," Amazon said on its Amazon India News Twitter account.

Amazon has been facing increasing scrutiny by Indian regulators, and the detailed look inside its strategy could deepen the risks for the company in one of its key growth markets. Indian retailers, who are a crucial part of Prime Minister Narendra Modi's support base, have long alleged that Amazon's platform largely benefits a few big sellers and that the e-commerce company engages in predatory pricing that harms their businesses.

In a written response to the Reuters story which was published on Wednesday, Amazon said it "does not give preferential treatment to any seller on its marketplace," and that it "treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory."

The Indian retailer group CAIT said, it’ll raise this issue in a bigger way.