ED Offers Flipkart Option To Settle FEMA Case By Paying Penalty

SUMMARY

The ED last week extended this offer under FEMA’s compounding rules, giving the Walmart-owned company an opportunity to admit its mistake, pay a penalty, and close the case

These allegations predate Walmart’s acquisition of a majority stake in Flipkart in 2018

The Enforcement Directorate (ED) has reportedly offered Flipkart the option to compound an ongoing Foreign Exchange Management Act (FEMA) violation case, allowing the ecommerce giant to resolve the matter without facing prolonged legal proceedings.

The ED last week extended this offer under FEMA’s compounding rules, giving the Walmart-owned company an opportunity to admit its mistake, pay a penalty, and close the case, news agency PTI reported citing sources.

Inc42 has reached out to Flipkart for comments on the development. The story will be updated based on the responses.

Under the compounding provision of FEMA, the ED provides an option to firms which have violated foreign exchange rules to acknowledge the breach and pay a fine voluntarily. This mechanism helps avoid lengthy investigations or court cases and ensures quicker resolution of non-criminal violations.

The ED has been investigating Flipkart for alleged FEMA violations linked to the structuring of its operations, including the creation of seller entities and the inflow of foreign investment between 2009 and 2015. These allegations predate Walmart’s acquisition of a majority stake in Flipkart in 2018. However, the agency has continued to examine the company’s structure and activities even after the acquisition.

In April 2025, the ED reportedly issued a fresh notice to Flipkart concerning its business practices after 2016.

As per the PTI report, the ED has also summoned Amazon India in connection with similar FEMA-related investigations.

Notably, the ED raided the offices of some sellers registered with Amazon and Flipkart last year. The agency has been investigating Amazon, Flipkart and their vendors to ascertain if their arrangements violated the FDI norms.

Besides ED’s scrutiny, Flipkart and Amazon are also being investigated by the Competition Commission of India (CCI) for alleged anti-competitive practices. The regulator was said to have found them guilty of violating the competition norms.