Doesn't smell right when a company makes a loss of Rs 6,000 cr on Rs 5,000 cr turnover: Piyush Goyal

Commerce and Industry Minister Piyush Goyal on Thursday asked e-commerce players to strictly adhere to FDI norms, saying it "certainly does not look and feel and smell right" when a company makes a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore.

Goyal was speaking at the Times Now Summit 2020 here.

The Union Minister also reiterated that neither the Competition Commission of India (CCI) nor his ministry would have to probe fair trade practices if e-commerce players "can stick within the letter and spirit of the law."

He said that India would welcome e-commerce companies to work within the framework and the laws of the land.

 

The minister was replying to a question about his earlier statement on Amazon and whether the company is breaking domestic laws of the sector.

"I had before me the CCI's preliminary findings. Our own office is also making queries on the various practices. I do hope and believe that if everybody can stick within the letter and spirit of the law, we won't have to go down the path of finding whether anybody is breaking the law or not but whoever makes losses will have to bring in FDI to pay for those losses," he said.

Goyal appealed to all stakeholders in the e-commerce industry to work within the letter and the spirit of the law and said: "I am sure it would look good for everybody."

"Promises of a certain number of people benefitting from e-commerce are very attractive, but it cannot be at the cost of a '10X' number of people suffering the consequences of practices which are not allowed and certainly a trillion-dollar company, competing with small retailers whose total capital may be a lakh of two lakhs of rupees is a very, very unfair competition," he said.

It is the government's job and duty to protect the interests of every small stakeholder in the sector, he added.

The minister said that the government allowed Foreign Direct Investment (FDI) in e-commerce for the marketplace model, in which a firm is supposed to work as an agnostic platform by providing buyers and sellers, an opportunity to transact on that platform.

"The platform cannot have a preferred supplier, it cannot determine the pricing, the platform cannot have control on the inventory, a platform cannot push buyers to sell and in that context, when a certain e-commerce company makes a loss of let's say over Rs 6,000 crore on a turnover of Rs 5,000 crore, right. It certainly doesn't look and feel and smell right. Very clearly a platform which has to be agnostic and encourage buyers and sellers to participate in fair trade, cannot make a loss of Rs 6,000 crore on a turnover of Rs 5,000 crore," he added.

Goyal said obviously if the company makes a loss of Rs 6,000 crore, they have to bring in money to pay for that loss.

He also said that the e-commerce policy very categorically has allowed only business-to-business transactions; so online retailers were never expected to be "a let's say a hidden way or a surreptitious way to enter multi-brand retailing."

Goyal also said the government is focusing on 12-13 sectors where exports can grow. He said that we had focused on cotton textile but now we moved on to manmade textiles.

The textile sector has the potential to take our textile industry from our current level of about USD 37 billion of export to possibly the next 10 years or hundred billion dollars. "So, we are working in a very focused panel," he added.