NEW DELHI: The Indian government is looking into whether hefty discounts offered on Walmart-owned Flipkart and Amazon.com during their online festive sales violate foreign investment rules, a commerce ministry official told Reuters.
India introduced new rules in February aimed at protecting the 130 million people dependent on small-scale retail by deterring big online discounts. The rules forced e-commerce firms to tweak their business structures and drew criticism from the United States, straining trade ties between New Delhi and Washington.
While Amazon and Flipkart say they’ve complied with the federal rules, local trader groups say the two companies are violating them by burning money to offer discounts — of more than 50 percent in some cases — during the ongoing festive sales.
Reuters reviewed emails and internal training material from Flipkart showing the company is in some cases offering to reduce, or forfeit, its sales commission from sellers that offer discounts.
The commerce ministry official said the government was reviewing complaints and evidence filed by the Confederation of All India Traders (CAIT), a group representing some 70 million brick-and-mortar retailers, alleging Amazon and Flipkart were violating the foreign investment rules.
The official declined to comment on possible action, but executives from Amazon and Flipkart were summoned to meet commerce ministry officials last week to discuss the matter.
Flipkart in a statement said it had a “good meeting” with government officials and it was “deeply committed to doing business the right way in India.”
Amazon said it had an “open & transparent discussion” with officials and has a high bar for compliance.
Seeking to attract shoppers around the key Hindu festival of Diwali, both retailers have placed full-page advertisements in top national daily the Times of India to showcase discount offerings stretching from Samsung and Apple phones to clothing and diapers.
“Customers are going online because of the unbelievable discounts. Because of this sales at offline businesses are down 30 percent to 40 percent this month,” CAIT’s secretary general Praveen Khandelwal said.
Two emails received by Flipkart sellers in September, just days ahead of the inaugural phase of the festive sales, showed it offering to partly fund discounts.
The company would “burn” 3 percent of the discount if a seller lowered a product price by 15 percent, or 9 percent if the seller discounted by 30 percent, said one of the emails.
In training material posted on Flipkart’s restricted website for its sellers, seen by Reuters, the company asks them to prepare for the festive season by saying “nothing is bigger than this” and explaining how they can benefit by discounting products for Flipkart’s premium customers.
“We want to ensure that you fetch as much profit from it as possible ... whatever the discount you are offering, half of that will be reimbursed to you by Flipkart,” a post said.
A Flipkart source said the incentives were compliant with Indian regulations and were aimed at promoting sellers’ earnings by effectively reducing the commission they pay.
All India Online Vendors Association, whose 3,500 members sell products on various online platforms including Flipkart, in a statement said fewer than 100 of its members benefitted from Flipkart’s partial discount funding, giving some sellers an unfair advantage.
India probes Flipkart, Amazon discounts after retailers complain
India probes Flipkart, Amazon discounts after retailers complain
- Products on Amazon, Flipkart listed at steep discounts in sale
- Trader groups allege firms violating foreign investment rules
SIDF finances 5k projects with over $53.3bn
RIYADH: The Saudi Industrial Development Fund has approved up to 5,000 projects — representing about 40 percent of the Kingdom’s industrial base — with a total investment value nearing SR200 billion ($53.3 billion), according to Khalil Al-Nammari, executive vice president for strategic planning and business development at the fund, who spoke to Al-Eqtisadiah.
This brought the fund’s total approved investments since its establishment in the 1970s to more than SR700 billion.
During the Vision 2030 period alone, the fund approved loans ranging between SR86 billion and SR90 billion, Al-Nammari said.
These loans attracted nearly SR190 billion in investments, highlighting the scale of expansion and growth in industrial lending and related sectors.
Repositioning within national ecosystem
Al-Nammari noted that the fund has repositioned itself within the national economic ecosystem in recent years, benefiting from the major transformation driven by Saudi Vision 2030.
He said the fund, which marked its 50th anniversary last year, has shifted from its traditional role of financing industry to a broader mandate covering industry, energy, mining, and logistics, adding that the expansion required a comprehensive strategic shift in lending mechanisms, services, and programs offered to these new sectors.
The fund launched innovative financing solutions and established the Industrial Fund Academy, which has so far trained more than 11,000 trainees from the public and private sectors.
According to the executive vice president, the scale of work and results achieved since the launch of Vision 2030 is equivalent to what was achieved over 36 years since the fund's establishment, underscoring the momentum generated by the vision and its derived strategies.
Long-term development partnership
Al-Nammari stressed that the fund's success is measured by the ability of projects to be built, operated, exported, and scaled, not only by the size of financing, pointing out that relationships with clients often extend 15 to 20 years due to the long-term nature of development loans.
On measuring development impact, Al-Nammari said economic feasibility studies, market analysis, and engineering assessments form the foundation before any loan is approved.
He added that the SIDF evaluates project performance after operations begin by monitoring financial statements, operational progress, production capacity, and sales growth, as well as export capabilities.
He added that the fund also assesses job creation and quality, all of which are indicators factored into lending decisions from the outset and monitored throughout the loan term.
As part of this effort, the fund conducts regular visits to more than 1,000 active projects in its portfolio to track construction and operational phases, assess financing needs, and provide solutions, advisory support, and academic services.
The goal is to ensure factories achieve their production targets, adhere to business plans, and enter local and global markets, contributing to industrial growth, higher exports, and greater sector contribution to gross domestic product.
New financing channels to attract capital
In the coming years, the fund will continue to focus on the sectors identified by the national strategy, spanning 12 areas, including food and pharmaceutical security, as well as future-oriented sectors such as clean energy, hydrogen, and electric vehicle components, as well as renewable energy, and supporting supply chains.
Al-Nammari said the fund has recently focused on creating new financing channels aimed at attracting capital from the private sector, banks, and investment funds.
In this context, the fund has launched the SIDF Investment Co., which holds existing commitments of SR50 million in funds and firms that support investment in the industrial sector.
Moreover, it has introduced the Supply Chain Financing program, the largest of its kind globally, aimed at providing financing solutions for the invoices of suppliers to major national companies.
The program is currently operating with firms such as Saudi Aramco and the Saudi Electricity Co., helping to support national supply chains and enhance the sustainability of small, medium, and advanced industrial projects alike.
