The Jodhpur bench of Rajasthan High Court has issued notices to Amazon and Flipkart in response to a writ petition filed by the online traders association Confederation of All India Traders (CAIT).
The ecommerce marketplaces have been given time till the next hearing on October 15 to respond to the charge of violation of foreign direct investment (FDI) policy.
Justice Dinesh Mehta who presided over the case has also issued a notice to the union government to respond to the same.
CAIT in its petition said the online marketplaces had violated the FDI norms repeatedly and were engaged in deep discounting, predatory pricing and controlling the inventory on the platform, hence deviating from the norms of a marketplace model.
“In violation of the policy, these ecommerce companies are creating an uneven level playing field. Whatever prescribed under the FDI policy, these ecommerce companies are conducting their business activities just reversing the policy,” said a statement from CAIT.
The association is being represented by Rajvendra Saraswat and Abir Roy.
Under the current rules, FDI in the inventory-led model of ecommerce is not allowed.
The department for promotion of industry and internal trade had issued Press Note 2 in December 2018 to tighten regulations around the same as online sellers have in the past alleged control of inventory and pricing by the likes of Amazon, Flipkart and others.
After the notification came into effect on February 1, online retailers have had to restructure the ownership of private labels being sold on the platform as well as the share of sales these brands.
As part of the Press Note 2, the ecommerce companies were also asked to upload audited certificates to prove compliance with FDI norms which has been delayed due to lack of clarity from the government on the format for the reports to be uploaded.