28 October , 2020 Fdiindia
Flipkart-Aditya Birla Fashion Proposed Deal Violates Government's FDI Policy: CAIT
The Confederation of All India Traders (CAIT) wrote to commerce minister Piyush Goyal
in the regard of FDI urging him to prohibit
Aditya Birla Fashion and Retail Ltd
(ABFRL), from directly or indirectly selling the whole inventory on the online marketplace platforms owned/controlled by the Flipkart Group.
It also requested the minister "to not allow the proposed FDI unless they undertake that ABFRL will not be selling its inventory through any of the marketplace platforms owned/controlled by Walmart-owned Flipkart Group".
ABFRL did not offer any comment. Last week, ABFRL said that its always board approved for proposed stake sale.
ABFRL made it very clear that the plans to use the capital to strengthen the overall balance sheet and also accelerate the overall growth trajectory.
The company said it has also entered into a commercial agreement in relation to the sale and distribution of its various brands. The transaction is subject to regulatory and other customary approvals.
"In its filing to the stock exchange, a clear intent to make ABFRL a preferred seller on the marketplaces owned and operated by Flipkart Group is shown which strictly violates the policy of the government," CAIT said in the letter to Goyal.
The traders' body also mentioned that overall the present FDI policy clearly discards and prohibits a foreign company venturing in any form of multi-brand retail trading (MBRT) including through e-commerce by having any equity interests in the sellers on the market-platform, or directly/indirectly controlling their inventory through side agreements, or under the garb of B2B e-commerce.
It said the "restrictive provisions in FDI policy, through press note 2 of 2018, were made to protect the small traders/kirana shopkeepers and Indian industry from the onslaught of capital duping by foreign multinational companies and any violation of such provision must be strictly dealt with".