tennews.in – #FDI IN RETAIL IN E-COMMERCE WILL DISTORT INDIAN RETAIL- CAIT E-RETAIL WILL DISTORT TAXATION SYSTEM

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The reported move of the Union Government and hectic lobbying by global e-retailers to obtain permission for FDI in Retail in e-commerce has come under strong criticism by the Confederation of All India Traders (CAIT) which has threatened to oppose any such move tooth and nail and if necessary, the CAIT will not hesitate to launch an all India agitation as it will prove to be a big threat to small shopkeepers. ” The eagerness of the Government to provide access to global retailers and e-retailers to Indian Retail Market through one way or the other needs to be condemned in strong words” -said Mr. B. C. Bhartia, National President and Mr. Praveen Khandelwal, National Secretary General of the CAIT. The Government need to upgrade and modernise the existing retail and then only should consider of opening e-retail sector to ensure equal level playing field-opined trade leaders.

Both Mr. Bhartia and Mr. Khandelwal said that with the opening of Indian e-retail, the same set of companies which were eying opening of FDI in Retail in Multi Brand and other established global e-retailers will monopolies the logistics sector and retail sector as they understand that the future of retail is the combination of both offline brick and mortar shops/store and online stores. In long run, the e-retail will lead to mass unemployment especially among the traditional shopkeepers, workers, transporters and associated population with minimal infrastructural development.

They further said that also like in case of multi brand retailers, e-retailers will get preferential treatment or will be in better position to exploit the taxation laws. In India, every state has its own taxation system, irrespective of federal taxation. The e-retail will distort the taxation system as it has been observed that e-retailing companies presently conducting business activities in e-commerce are dodging the due tax revenue of the consuming State since such e-retailers are registered with taxation department in one state and after paying local tax of the concerned State, are delivering products to consumers of any State of their choice without paying any tax of the State where actually the products have been consumed. Under VAT tax regime, the last point i.e. final consumer is liable to pay tax whereas in cases of e-retailers they charge tax by raising local invoice and thus circumventing prescribed taxation system.  It is the biggest anomaly and a clear case of trespassing the VAT taxation system.

E-retail itself places the traditional and unorganized retailers in a state where they cannot compete with deep pocketed investor who has policy level direct support or is in position to exploit the systemic loopholes.   It is nothing but a back door entry to global retailers which will facilitate them to side step restrictions in Multi Brand retail since e-commerce has no geographical restrictions-said Mr. Bhartia and Mr. Khandelwal.

There are about more than 5 crore business enterprises in retail trade of India which is contributing about 15% to National GDP with an annual growth of 15% with an annual turnover of more than Rs. 20 lakh crores of rupees and more than 22 crores of people are dependent upon retail trade for their livelihood where as on the other hand the MSME sector in India currently contributes around 9 per cent of GDP, accounts for around 36 per cent of the total value of exports and provides employment to over 8 crore persons through more than 3.6 crore enterprises. Also the sector has been growing consistently above 10 per cent for the last five years.

The FDI in e-commerce will greatly hamper the existing retail trade and MSME sector and will wreck the already dilapidated economic condition of the Country and as such the trading community will oppose any move of the Government to allow FDI in retail in e-commerce.

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