RAI to once again approach Delhi High Court over ecommerce FDI

Physical retailers facing stiff competition from ecommerce players due to their discounting policies, are now approaching the Delhi High Court to get clarity on FDI norms for ecommerce firms. They want a clear picture on government allowing foreign funding into the so called marketplace models.

The Retailers Association of India (RAI) comprising of leading names like Future Group, Reliance Retail and Shoppers Stop as members, believes foreign companies operating online marketplaces that offer a platform for global brands is having a negative impact on traditional retail. India allows 51 percent FDI in multi-brand retail, with conditions like 30 percent mandatory local sourcing and 100 million dollars (over Rs 650 crores) of upfront investment.

RAI, representing over 1,000 retailers, had filed a writ petition against the government in May asking for a level playing field in foreign investment. The Delhi High Court converted the petition into a representation on May 21, 2015 and directed the association to discuss the matter directly with the government. If there is no satisfactory response then the association can approach the court again within four months.

Meanwhile even associations of mobile and footwear sellers have filed similar petitions alleging FDI violations. In August, the All India Footwear Manufacturers & Retailers Association filed a petition in the Delhi High Court, alleging violation of FDI norms by online marketplaces. And last month, the Kerala High Court admitted a case from the Mobile Retailers Association that accused ecommerce firms including Amazon, Flipkart and Snapdeal of FDI violations.