India’s small businesses have taken their fight against Amazon and Walmart a notch higher.
Yesterday (Nov. 30), the Confederation of All India Traders (CAIT), an organisation of over 60 million small local businesses, wrote a letter to finance minister Nirmala Sitharaman alleging that banks in the country are indulging in “unethical practices” in collusion with Amazon and Flipkart (owned by Walmart) by giving cash backs and incentives to shoppers who make payment using specific credit or debit cards.
“If the same product is purchased from an offline market even by using the card of the same bank, the respective bank is not offering any cashback or incentives,” CAIT said in its letter. “Such collusion of the banks with these companies restrict the offline traders from conducting smooth business.”
CAIT has named most of India’s top banks, including State Bank of India (SBI), Bank of Baroda (BoB), ICICI Bank, Axis Bank, Citi Bank, HDFC Bank, Kotak Mahindra Bank, HSBC Bank, and RBL Bank, for having this kind of an “unholy alliance” with Amazon and Flipkart.
The practice of offering a special discount to shoppers using cards of a particular bank is nothing new to Indian e-commerce. A glance through the websites of Amazon or Flipkart shows that the practice is pretty widespread, too.
In its letter, CAIT said:
It is (a) matter of gross violation of banking policies and interesting to note that these banks which are often miser in giving even 0.5% discount in interest rates to (the) common man and even do not reduce the interest rate even in a situation when RBI (Reserve bank of India) reduces the repo rate, have suddenly become a charitable institutions for big e-commerce companies in giving 10% cash back/discount and that too those business entities which are running their business in losses for past many years.
CAIT versus e-commerce
This is not the first time CAIT has raised concerns over Amazon and Flipkart. In January, CAIT’s national secretary-general Praveen Khandelwal organised a nationwide protest against Amazon founder Jeff Bezos during his surprise trip to India.
In November, CAIT wrote to the Department for Promotion of Industry and Internal Trade (DPIIT) seeking action against violation of norms of foreign direct investment by Amazon and Flipkart. “Our association has been requesting your good office to take appropriate steps and investigate, punish and penalize the multinational companies like Amazon and Flipkart for the blatant violation and/or by the exploitation of the loopholes of the FDI policy and Foreign Exchange Management Act,” it had said in its letter to DPIIT.
On Nov. 29, CAIT also sent a letter to prime minister Narendra Modi urging him to draft stronger e-commerce policies in the interest of local businesses and to save them from the big e-commerce firms.