At a conclave held in New Delhi, a coalition of leading trader associations called for the immediate establishment of an independent regulatory authority to oversee the digital commerce ecosystem in India. The demand comes amid rising concerns over alleged anti-competitive practices, including deep discounting, predatory pricing, and non-compliance with foreign direct investment (FDI) norms by e-commerce and quick commerce platforms.
The Confederation of All India Traders (CAIT), All India Mobile Retailers Association (AIMRA), All India Consumer Products Distributors Federation (AICPDF), and the Organised Retailers Association (ORA) have jointly raised alarm over the unchecked expansion of e-commerce players at the cost of small retailers and local distributors.
“These platforms are not marketplaces. They operate as inventory-led businesses under the guise of compliance,” said Dhairyasheel Patil, National President of AICPDF, highlighting that while companies in this space have received over ₹54,000 crore in FDI, only 2.5% has gone into infrastructure development.
Regulatory Vacuum in a Disrupted Market
The groups also demanded expedited implementation of the National e-Commerce Policy and e-commerce rules under the Consumer Protection Act, both of which are currently under review by the Centre. The call for regulation is tied to broader concerns about the absence of a statutory authority to enforce accountability, monitor compliance, and protect the interests of the domestic retail sector.
CAIT Secretary General and Member of Parliament Praveen Khandelwal stated that quick commerce firms were actively violating FDI norms by financing operational losses rather than investing in physical or digital infrastructure.
“FDI is being used not to build capacity, but to capture control over the supply chain and drive out small retailers,” he said.
Demand for a Luxury Tax and Ban on Inventory-Led Models
In a controversial recommendation, the trader bodies proposed that a luxury tax be levied under the GST framework on goods sold online. The rationale is that online shopping should be considered a premium consumption mode, thus attracting higher taxation.
They also reiterated the prohibition of inventory-led operations by e-commerce platforms that pose as marketplaces. Under current policy, 100% FDI is allowed in marketplace models, but not in inventory-based operations. Yet, the line between the two remains blurred in practice.
Escalating the Fight: National Campaign and Strategic Push
The collective announced a nationwide campaign beginning May 1, warning that the retail community would no longer tolerate what it calls “digital monopoly practices.” A formal strategic roadmap will be unveiled during CAIT’s National Governing Council Meeting in Bhubaneswar on April 25–26.
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“We will not remain silent. Local trade associations in every city and state will rise to defend India’s retail democracy,” said BC Bhartia, CAIT National President.
Implications for CXOs and Policymakers
For enterprise leaders and policymakers, these developments signal increasing friction between traditional retail stakeholders and digital commerce platforms. With the Competition Commission of India (CCI) already probing certain e-commerce firms, this growing momentum from grassroots business communities could catalyse long-awaited policy reform in India’s digital commerce space.
As regulatory clarity tightens and market pressure builds, digital platforms may soon face greater scrutiny, higher compliance standards, and new taxation models—redefining the competitive landscape for India’s $100+ billion e-commerce sector.
