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The Silicon Review Asia

Retail giants Amazon and FlipKart are under investigation for their festive discounts

Retail giants Amazon and FlipKart are under investigation for their festive discounts

The Indian government is checking for the violation of foreign investment rules on Walmart-owned Flipkart and Amazon.com during their festive sales due to the hefty discounts that the companies offer. India introduced a few new rules in February to protect 130 million small scale  from the big online discounts. The new rules were rigid for e-commerce firms and this forced them to tweak their business functions. The new rules drew criticism from the U.S. and caused a minor strain in trade ties between Washington and New Delhi. Flipkart and Amazon claim that they have complied with federal rules, but local traders are counterclaiming that the retail giants are not practicing fair trade by shelling money to offer huge discounts.

Reuters thoroughly reviewed the internal training materials and emails that were sent by Flipkart. It showed that in few cases the company reduced or completely forfeited its sales commission to offer discounts. Reuters were told about the government review of complaints and evidence against Flipkart and Amazon for violation of foreign investment rules by the commerce ministry official. Amazon stated that the discussion with the officials was open and transparent. Praveen Khandelwal, CAIT's secretary-general, made a statement that due to hefty discounts; the offline business is down by 30 percent to 40 percent.

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