Delhi High Court hears a PIL on e-commerce sites flouting FDI policy

The Delhi High Court heard a public interest litigation (PIL) against e-commerce sites and business entities for allegedly violating the principle of foreign direct investment (FDI) policy. The PIL sought action against those firms that have received FDI. A reply was also sought from the Reserve Bank of India (RBI) on its circular governing its FDI policy.

The PIL was filed by chartered accountant Dinesh Kothari and human rights activist Amulya Nidhi. They alleged that the various companies receiving FDI were dealing with customers by transacting through their closely held non-FDI receipt sister concern, website or business group under which FDI is allowed. The PIL said that the companies were arbitrarily interpreting laws, policies and procedures in their favour. As a result the companies are functioning as business-to-consumer (B2C) under the garb of business-to-business (B2B) platform where FDI is permitted.

On the petition of All India Footwear Manufacturers and Retailers Association (AIFMRA), the court had ordered a probe into 21 e-commerce companies such as Flipkart, Myntra and Snapdeal to determine the nature of these websites. The probe is yet to be completed. In fact, last few years, retailers have been fighting for a single FDI policy that suits all. Even Retailers Association of India, which has more than 1,000 retailers, had approached the Delhi High Court to make possible a level playing field in terms of FDI.

The matter will be herd next on February 24.