ED searches premises linked to vendors of top e-tailers in 4 states
New Delhi, Nov 8, 2024
The Enforcement Directorate (ED) is investigating Amazon and Flipkart for potential violations of foreign exchange regulations. The probe, stemming from complaints about unfair business practices, focuses on allegations that the e-commerce giants manipulate pricing and disadvantage smaller vendors. While searches were conducted at vendor locations, the ED hasn't targeted Amazon or Flipkart directly yet.
The ED on Thursday conducted searches at 19 premises in Delhi, Bengaluru, Mumbai, Hyderabad and Panchkula at main vendors of Amazon and Flipkart in a case related to Foreign Exchange management Act (FEMA) violations.
Sources said, an investigation was initiated after ED received complaints against the two leading e-commerce platforms that they are violating FDI rules by directly or indirectly influencing the sale price of goods or services and not providing a level playing field for all the vendors.
"We do not have any comments on this as of now," said a spokesperson from Amazon.
Though complaints have been received against Amazon and Flipkart, the agency has not yet searched their premises. After statements of the vendors, accused of violating foreign direct investments rules under the FEMA, are recorded the agency may summon officials of the two e-commerce companies to join the investigation.
The predatory pricing of the e-retailers has been under the scanner of the investigative agencies for quite some time. Flipkart was even questioned by the income tax authorities when Walmart took over the ownership from its Indian promoters in 2018 in a $16 billion deal. The tax authorities questioned Flipkart promoters Binny and Sachin Bansal sometime in 2021 for Rs 10,600 crore FDI brought into the company during 2010 to 2014.
One of the suspicious transactions raised by the tax officials was related to the company, in the year of its deal with Walmart, incurring a loss of Rs 46,901 crore (in 2017-18) when the total revenue of the company in that financial year was only Rs 30,164 crore.
News agency PTI reported that the Confederation of All India Traders (CAIT), which has also filed complaints with the ED, said they had earlier approached the Competition Commission of India and a penalty notice has been issued to the e-retailers.
Praveen Khandelwal, BJP MP and CAIT secretary general, said Amazon and Flipkart, through their "preferred" sellers are "engaged" in anti-competitive practices that have adversely affected small traders and 'kirana' stores.
[The Times of India]
