FMCG Distributors Seek Government Probe Into Business Model Of Instamart, Blinkit, Zepto
A FMCG distributors' body has written to Commerce Minister Piyush Goyal seeking an investigation into whether Instamart, Zepto and Blinkit are in violation of India's FDI rules.
An FMCG distributors' body has written to Piyush Goyal to investigate the operational models of quick-commerce platforms, days after the union commerce minister lamented e-commerce's impact on retailers in the country.
The All India Consumer Products Distribution Federation wrote to Goyal on Aug. 21 demanding a "thorough investigation into the operational models" of quick commerce platforms such as Blinkit, Zepto and Instamart, "to ensure compliance with FDI regulations".
The federation also asked the central government to implement measures to protect small retailers from monopolistic practices and facilitate a dialogue between all stakeholders, including representatives from the retail sector, FMCG companies, and quick commerce platforms, to establish fair business practices.
"The unchecked expansion of these quick commerce platforms is leading to severe disruptions in the retail ecosystem. Specifically, we are witnessing the erosion of small "mom-and-pop" stores and a shift in the FMCG distribution landscape, as these platforms are increasingly being appointed as direct distributors by major FMCG companies, side lining traditional distributors," the federation wrote.
FDI rules prohibit e-commerce entities operating under the marketplace model from holding inventory or exercising control over the inventory sold on their platforms, it said.
"However, it appears that these quick commerce platforms may be engaging in practices that blur the lines between a marketplace and an inventory-based model, potentially violating FDI norms," AICPDF National President Dhairyashil Patil wrote. This situation is not only creating an uneven playing field, but also threatening the livelihoods of millions of small retailers and distributors who have been the backbone of India's retail sector for decades, he wrote.
The move by AICPDF comes days after Union Minister Goyal questioned Amazon's Rs 6,000-crore loss in India, hinting there were predatory pricing policies at the e-commerce platform. He also noted that the growth of e-commerce can cause "huge social disruption" to retailers and shop owners.
