The Enforcement Directorate (ED) will summon executives from Flipkart and Amazon as part of an investigation into alleged violations of foreign investment laws. This comes shortly after the ED raided some of the e-commerce firms’ sellers. The move highlights the growing regulatory scrutiny over Walmart-owned Flipkart and Amazon, which are seeing rapid growth in India’s $70 billion e-commerce market. An Indian antitrust investigation had previously found that the two companies violated laws by favoring select sellers, as reported by Reuters.
Both Amazon and Flipkart have asserted that they comply with Indian laws, but the Enforcement Directorate has been investigating the companies for years. Allegations suggest that through select sellers, these firms exert control over inventory, which is prohibited under Indian law. The law mandates that foreign e-commerce companies cannot hold inventory of goods for sale on their websites and can only operate as marketplaces for sellers.
Following last week’s raids on Amazon and Flipkart sellers, the ED plans to summon company executives and review documents seized during the operation. The raids, which lasted until Saturday, have reportedly confirmed violations of foreign investment rules. The ED will also examine business data from the sellers and their transactions with the e-commerce companies over at least the past five years, according to a senior government source involved in the case.
Amazon, Flipkart, and the Enforcement Directorate did not immediately respond to requests for comment. The latest raids were initiated after findings from the antitrust investigation that claimed Amazon and Flipkart had “end-to-end control over the inventory” and that the sellers were merely lending their names to the operations. Among the sellers raided were Appario, once Amazon’s biggest Indian seller, which reportedly had special access to tools for inventory management and received discounted fees, as revealed in a 2021 Reuters investigation.
