After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors

After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors

SUMMARY

ED is conducting this investigation in relation to alleged violations under the Foreign Exchange Management Act (Fema)

The agency was earlier investigating the sellers

The investigation aims towards finding if the ecommerce companies had any control over the vendors while it can only act as a platform

After sellers, the Enforcement Directorate (ED) has now shifted its focus to investigating into ecommerce players Amazon and Flipkart and their vendors and if their arrangement had violated the foreign direct investment (FDI) norms.

ED is conducting this investigation in relation to alleged violations under the Foreign Exchange Management Act (Fema). 

The agency was earlier investigating the sellers. The investigation aims towards finding if the ecommerce companies had any control over the vendors while it can only act as a platform, ET reported citing sources close to the matter.

Inc42 has reached out to Flipkart and Amazon. The story will be updated based on their responses. 

Earlier this month, ED raided offices of some sellers registered with Amazon and Flipkart. 

“The sellers covered during the searches were summoned and have been questioned to explain certain transactions and arrangements. Documents are being studied thoroughly,” a source told ET.

After raiding the select sellers offices across Delhi NCR, Mumbai, Bengaluru, Gurugram and Hyderabad, ED is also mulling to summon executives of both the ecommerce giants.

“The main focus is to ascertain whether Amazon and Flipkart operated through a preferred set of sellers, which were invariably controlled by them but disguised as independent vendors, thus violating FDI norms,” said the source.

This comes at a time when both the ecommerce giants have been facing legal challenges lately.

The Competition Commission of India (CCI) recently found Amazon and Flipkart guilty of violating competition laws by giving preference to select sellers on their platforms. 

The reports then said that Amazon’s preferred sellers on the ecommerce platform received “advantage in the (online) listing”, adding that a customer’s “attention” was drawn towards the listing when he/she searches for any product.

Meanwhile for Flipkart, the Commission said that preferred sellers were provided various services such as marketing and delivery at a “miniscule cost”.

Now, CCI is mulling to move the Supreme Court in connection to this case.

Step up your startup journey with BHASKAR! From resources to networking, BHASKAR connects Indian innovators with everything they need to succeed. Join today to access a platform built for innovation, growth, and community.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
UNLOCK 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
UNLOCK 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors-Inc42 Media
After Sellers, ED Shifts Probe Into Amazon & Flipkart Vendors-Inc42 Media
You’re in Good company