Investigate Flipkart for violation of FDI rules, urges CAIT

Traders' body CAIT has urged the government to investigate Flipkart for its blatant violation of FDI and taxation rules. As per a report by Economic Times, CAIT has alleged that the Walmart-owned firm has restructured its business model to exercise control over inventory and retail prices.

This warrants an immediate investigation and strict action from the Indian government, including tax authorities, Confederation of All India Traders (CAIT) added.

In 2018, WalmartInc had invested $16 billion for acquiring a 77 per cent stake in Flipkart. Last year, the US retail giant led a $ 1.2 billion funding round in the Indian e-commerce company.

CAIT noted that in 2019, Flipkart had created a two-tier model consisting of ADs and Diamond Sellers (DSs) and that currently, there are 20 DSs and 10 ADs in place.

These 30 entities were created for the sole purpose of granting control of inventory and prices to Flipkart, and to "act as an eye-wash and (to) distract the government from taking note of the wholly illegal activities" being undertaken by Flipkart and these entities, it alleged.

CAIT alleged that the ADs and DSs exist only for GST compliance and to service their arrangement with Flipkart and cede control for a minuscule cost.