ED said he should summon Amazon and Flipkart executives as regulatory scrutiny increases
India’s financial crime bureau will summon executives from Flipkart and Amazon as it steps up a probe into alleged violations of foreign investment laws, days after raiding a number of e-commerce sellers, a senior government source said.
The planned action signals increasing regulatory scrutiny of Walmart-owned Flipkart and Amazon as their sales grow rapidly in India’s $70 billion (about Rs. 5,93,614 crore) e-commerce market. An Indian antitrust investigation also found that the two companies broke laws by favoring select sellers, Reuters reported.
Amazon and Flipkart have maintained that they comply with Indian laws, but the Enforcement Directorate has been investigating allegations for years that the companies, through select sellers, exert control over the inventory of goods.
Indian law prohibits foreign e-commerce players from maintaining an inventory of goods to sell on their website, forcing them to operate only a marketplace of sellers.
Following last week’s raids by the Directorate against Amazon and Flipkart sellers, the federal agency now plans to summon the company executives and is currently examining documents seized from the sellers during the operation, said a senior government source was directly involved in the case on Monday.
The searches continued into Saturday and showed violations of foreign investment rules, said the government source, who declined to be named because details of the raids have not been made public.
The directorate will also analyze business data of sellers and their dealings with e-commerce companies in the last five years, the official added.
Amazon, Flipkart and the Enforcement Directorate did not immediately respond to Reuters’ queries.
End-to-end control
Datum Intelligence estimates that Flipkart had a 32 percent market share and Amazon had a 24 percent share last year in Indian e-commerce, which roughly accounts for 8 percent of the $834 billion (approximately Rs. 70,37,303 crore) retail sector. ) is responsible for.
The latest raids were prompted by findings from the antitrust investigation of Amazon and Flipkart, which found that the platforms had “end-to-end control over inventory and that the sellers were merely name lending companies.”
Two other sources with direct knowledge of the matter said at least two Amazon sellers and four Flipkart sellers were robbed last week.
A 2021 Reuters investigation based on internal Amazon papers found that the company exerted significant control over the inventory of some of its largest sellers, even though Indian law prohibits foreign players from doing so.
One of the sources said on Monday that Appario, once Amazon’s largest Indian seller, was among those raided last week as officials inspected financial books and questioned executives about their dealings with the US-based e-commerce giant.
Appario was internally referred to as a “specialty” merchant and received discounted fees and access to Amazon’s global retail tools used for things like inventory management, unlike other sellers, the 2021 Reuters investigation found.
Appario did not respond to a request for comment.
Online shopping and delivery platforms are increasingly under scrutiny in India amid complaints of unfair trade practices that hurt smaller players. Reuters reported last week that the antitrust agency also found that food delivery giants Zomato and Swiggy broke the law by giving preference to select restaurants in their apps.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
