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Why has retailers' association filed a case against Amazon.in?

The association has complained to the government and accused Amazon of violating foreign investment laws by the offer of gift vouchers to its customers

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The Retailers Association of India (RAI) has complained to the government against Amazon.in, saying that the e-commerce company has violated India's Foreign Direct Investment (FDI) norms. 

Amazon recently announced Rs 200 gift cards to Indian customers who shopped for above Rs 500, in a bid to thank its customers after the website was named the most-visited e-commerce website in the country only two and a half years after its entry into the country. 

On the day, the Amazon.in website carried a letter from Amazon CEO Jeff Bezos, thanking Indian customers and pledging that the company will keep adding investments in India.

Also read: Amazon.in is most-visited e-commerce website in the country; Jeff Bezos thanks Indians

While the Rs 200 gift card offer was welcomed by customers, it has irked the Retailers Association, prompting it to complain to the government. 

The association has accused Amazon of violating foreign investment laws by way offering of gift vouchers to its customers, an ET report said.

According to FDI norms in the country, business-to-business e-commerce companies in India are allowed foreign capital investment, but investing in business-to-consumer e-commerce companies is not allowed.

Most e-commerce websites that have foreign investments, claim that they are merely a network orchestrator, acting as a medium or a platform between small sellers and consumers, which means it is a business-to-business model. 

In the wake of the recent Rs 200 offer, RAI said in a letter to secretary of Department of Industrial Policy & Promotion (DIPP) Amitabh Kant --such transfer of cash value to end-costumers, which incentivised end-consumers to shop on a website – does this pass the test of B2B business transaction even when cash is directly being offered to retail customers?

Also read: Traders oppose FDI in retail, e-commerce; HC asks Centre to take views

India retailers say that the marketplace is a false model used by e-commerce companies for the sales of foreign online retailers, the report said.

Also read: Delhi High Court no to interim order against e-commerce sites like Flipkart and Amazon

Retailers for the past several months have upped their attack on the e-commerce businesses, which are growing at a rapid pace in the country. This also includes India's shoe manufacturers and retailers which have taken the government to a Delhi court on alleged FDI violations by online companies.

The Delhi court in November had ordered a check on 21 e-commerce companies which were named in the petition to check them for FDI violations.

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