Quick commerce platforms flouting FDI norms, competition law, alleges CAIT

The traders' body issued a white paper, claiming unfair business practices are putting nearly a quarter of 3 crore kirana retailers out of business

The Confederation of All India Traders (CAIT) on Wednesday alleged that quick commerce platforms are violating several domestic laws in the country, including Foreign Direct Investment (FDI) norms, the Competition Act, and the Consumer Protection Act.

 

In a white paper, the trade body claimed that the country’s top three quick commerce platforms – Zomato-owned Blinkit, Swiggy Instamart, and Zepto – have received FDI funds of more than Rs 54,000 crore.  

 

“Of this, only Rs 1,300 crore (or 2.5 per cent) has been used to create real assets. It is estimated that over 50 per cent of the FDI may have been spent covering operating losses incurred due to practice of predatory pricing,” the document stated. 

   

This violates FDI norms which were intended to foster long term growth by creation of assets and infrastructure, it added.  

 

“We will share a copy of this white paper with the Competition Commission of India, Ministry of Consumer Affairs, and chief ministers of all states as retail trade is a state subject,” said Praveen Khandelwal, secretary general, CAIT.

 

Additionally, these platforms violate the FDI norms and Acts by using a “closed nexus of preferred sellers,” the CAIT alleged in its paper, saying that FDI rules explicitly prohibit foreign-backed marketplaces to control or hold inventory.

 

The trade body has also claimed that these quick-commerce platforms violate the Competition Act by restricting market access through exclusive deals with selected sellers, deep discounting practices, and predatory pricing. By providing free or heavily-discounted warehousing and delivery services to preferred sellers, they are pushing small retailers and kirana shops out of the market, it said.  

 

According to CAIT, Blinkit operates through five key sellers including Kemexel Ecommerce, TAMS Global, Superwell Comtrade among others. Swiggy insatmart relies on PYD Retail, Bhagwati Stores, Getmax Globe, FOCLO Technologies among others. Meanwhile, Zepto bypasses third-party sellers entirely by directly supplying products as an inventory-based e-commerce entity.

 

The white paper alleges that these platforms have entered into vertical agreements with their preferred sellers, thus controlling every aspect of production, supply, storage, distribution, and pricing.  

 

This, the documents says, limits market access for independent sellers, influences purchase prices, and restricts consumer options.  

 

Additionally, it claims, the platforms are breaching the Consumer Protection Act by failing to provide information about the sellers to consumers in a transparent manner.  Such practices, the trade body said, are endangering the livelihoods of 3 crore kirana retailers, pushing nearly a quarter of them to shut shop.  

 

The white paper comes even as regulators are increasing scrutiny of quick commerce platforms. On Tuesday, the Food Safety & Standards Authority of India (FSSAI) asked e-commerce and quick- commerce food business operators to ensure a minimum shelf life of 30 per cent or 45 days before expiry of products at the time of delivery to consumers.  

 

Last month, the Central Consumer Protection Authority (CCPA), too, had issued notices to quick commerce and e-commerce firms for flouting rules by not displaying the MRP and ‘best-before’ dates for perishable goods on their platforms, as is mandated in the Legal Metrology Packaged Commodity Rules (PCR) 2017.

 

Emails sent to Blinkit, Swiggy Instamart and Zepto remained unanswered till the time of publication.