Confederation of All India Traders called for a probe in the business model and trade practices of e-commerce companies to find out how they are offering huge discounts during the ongoing festive season.
"How can the marketplace model companies can offer 'big sale'? Diwali Sale? when they are not the owners of the inventory," a CAIT release said.
"Certainly, there is some fishy which is hidden behind the scene and which needs to be unearthed to provide fair play and competition," it said.
In a communication sent today to Commerce Minister Nirmala Sitharaman, the CAIT has demanded a thorough probe in to the working and business model of e-commerce companies. It has demanded setting up of a special task force of experts to conduct an in depth probe of working of such companies.
The traders' body has sought the investigation as to how the e-commerce companies are able to sell "same brand and quality of goods much cheaper than brick-and-mortar shops".
It further said that if required, the body may lodge a complaint with Competition Commission of India, alleging that the online business is "indulging into unfair competition practices".
The body has also raised a question of "diversion of VAT tax" by these companies which is causing great revenue loss to the state governments.
It has asked the central government to set up a regulatory authority to regulate and monitor the e-commerce business in the country.
In a joint statement, CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said that recently big advertisements appeared in newspapers for "big sale" by e-commerce companies.
Such companies, they said, pretend to be a marketplace. In such model, the e-commerce companies are merely providing technology platform and ownership of the products lies with sellers registered on such marketplace platform.
