Piyush Goyal Asks Ecommerce Players To Follow & Respect FDI Laws

Training guns yet again on online marketplaces, commerce minister Piyush Goyal directed ecommerce platforms to stick to the rule of the law on foreign direct investments (FDI). 

“The law of the land is very clear about foreign direct investment…I have been repeatedly talking about the subject that every ecommerce company should respect the law of the land both (in) the letter and spirit,” Goyal said as per news agency PTI.

While noting that the country’s FDI norms are clear for the ecommerce players, he added, “If you read today’s papers, it opens up a lot of people to question”.

The comments came on the same day as reports claimed that the Enforcement Directorate (ED) had found “direct links” between Amazon and Flipkart and their preferred sellers.

The latest comments come a couple of months after Goyal publicly lashed out at alleged predatory pricing tactics employed by ecommerce major Amazon. He went on to say that the ecommerce major plans to invest billions of dollars in India only to offset its losses and not for any great service or any great investment to support the Indian economy. 

However, a day later, Goyal clarified that the government was not against online marketplaces but wanted them to operate fairly. 

Noticeably, Goyal’s comments also come amid the government’s ongoing crackdown on ecommerce platforms. Earlier this month, ED conducted searches at some of the “main vendors” of ecommerce giants Amazon and Flipkart in connection with a probe into violations of FDI norms. 

As many as 19 premises linked to these “preferred” sellers were searched across Delhi, Gurugram, Panchkula, Hyderabad, and Bengaluru. 

Besides, the Competition Commission of India (CCI), in September 2024, reportedly found both Amazon and Walmart-backed Flipkart guilty of violating competition laws. In an internal report, the competition watchdog noted that both ecommerce platforms flouted antitrust guidelines by giving preference to select sellers on their platforms. 

The aftermath saw one of the former largest sellers of Amazon, Appario Retail, challenge the findings in the Karnataka High Court in September. Thereafter, the HC heard three identical petitions from sellers and granted an interim stay on the CCI’s proceedings until November 20.

On top of that, more than a dozen writ petitions have been filed by sellers of the two ecommerce platforms in the HCs of Karnataka, Telangana, Madras and Kolkata, challenging the CCI’s investigation report. 

Just days ago, reports also surfaced that the CCI was planning on moving the Supreme Court (SC) in connection with the antitrust case against Amazon and Flipkart. 

The crackdown comes close on the heels of the Confederation of All India Traders (CAIT) writing a letter to the central government, alleging violation of FDI rules by the two ecommerce players and adverse impact of deep-discounting tactics employed by online marketplaces on small brick and mortar stores.