New Delhi: The Confederation of All India Traders (CAIT) has written to Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal as well as the competition regulator, seeking action against e-commerce company Shopee for alleged unauthorised entry in the country.
According to CAIT, the company is Chinese and violated the foreign direct investment (FDI) policy of 2020, which mandates prior Union government approval in case “any investment is made by an entity of a country sharing land border with India, or where the beneficial owner of an investment in India is situated in a land bordering country”.
The amended policy was launched in April 2020 amid fears over Chinese takeover of Indian firms.
CAIT has claimed that Shopee began operations under a complex corporate structure across Singapore and the Cayman Islands to hoodwink the Indian government about its origin.
“I bring to your notice the conduct of operations by an e-commerce entity, Shopee, in breach of the Press Note 3 (2020) series published by the Government of India on 17.04.2020 (amendment to FDI policy and the Foreign Exchange Management Rules, 2019),” CAIT secretary general Praveen Khandelwal wrote in his letter to Sitharaman and Goyal.
CAIT also sent a copy of the letter to the Competition Commission of India (CCI).
“As such, I request you to examine, enquire (sic) and take necessary action as may be deemed appropriate in law against the mobile application, Shopee and the corresponding website, www.shopee.in, and all similarly situated entities, including SPPIN India Private Limited,” he said.
Giving further details, Khandelwal said Shopee is a Chinese e-commerce giant which has commenced its operations in India through an entity, SPPIN India Pvt Ltd, held by two holding companies SPPIN I Pvt Ltd and SPPIN II Pvt Ltd, both registered in Singapore.
“These two entities are in turn held by another parent company SPPIN Limited, registered in the Cayman Islands. This complex structuring of entities is nothing but an attempt to hoodwink the Indian government and infuse Chinese funds into India,” he alleged.
‘Illegal control over India’s retail market’
According to the traders’ body, the aim of the brand owned by Chinese giant Tencent is to establish illegal control over India’s retail market.
“More pertinently, it is well known that Shopee is a brand which is controlled and operated by Tencent, and the Chinese-born, Forrest Xiaodong Li. It is with the motive to establish illegal control over the retail market in India that Shopee is launched into India by using the complex camouflage of a number of corporate veils and multiple foreign entity structures,” the letter said.
The traders’ body claimed that the entry of Shopee is going unnoticed specifically since the firm has been listed with a new company. It also highlighted how products are allegedly being sold on the platform at “astonishingly low prices”.
“The Government of India has over the years taken stringent actions against Chinese applications in view of such apps engaging in activities ‘prejudicial to the sovereignty, and security of India’. However, some apps often do not fall under the radar of the government simply because they mask their origin,” it said.
“A bare perusal of the Shopee website and application will show that many products are sold on the platform at astonishingly low prices of Rs 1/ Rs 9/ Rs 49 etc. Screenshots evidencing the same have been attached,” it said.
“This is nothing but a deliberate pricing strategy adopted by the e-commerce giant with the intention of reducing prices of products to nonsensical and loss-making levels in the short-term so as to undercut and extinguish small sellers and retailers in the long term. This low ball pricing by Shopee is being done with a calculated view to kill the offline players and micro and small-scale businesses and retailers in the country and amounts to predatory pricing and unfair trade practice,” the CAIT letter alleged.
(Edited by Amit Upadhyaya)