 |
|
The Enforcement Directorate (ED) of India is stepping up its investigation into alleged violations of foreign investment laws by e-commerce giants Amazon and Flipkart. This intensified scrutiny comes days after the ED raided some of the companies' sellers, raising concerns about the growing regulatory scrutiny of these online marketplaces, especially given their rapid expansion in the $70 billion Indian e-commerce market.
The ED's investigation is spurred by findings from India's antitrust regulator, the Competition Commission of India (CCI), which revealed that Amazon and Flipkart had violated regulations by favoring select sellers. The agency suspects that these companies, through these preferred sellers, exert control over the inventory of goods, potentially circumventing Indian laws that prohibit foreign e-commerce operators from holding inventory directly.
The ED's investigation has focused on examining documents seized during the raid of sellers last week. These searches, which extended until Saturday, provided evidence of potential violations of foreign investment rules. The ED plans to summon executives from both Amazon and Flipkart, and will analyze business data from sellers, including their deals with the e-commerce companies over the past five years.
This investigation comes amidst growing concerns about the dominance of Amazon and Flipkart in the Indian e-commerce landscape. Flipkart holds a 32% market share, while Amazon controls 24%, accounting for a significant portion of India's $834 billion retail market. The antitrust investigation findings, which accused the platforms of having “end-to-end control over the inventory,” further fueled the scrutiny.
The ED's investigation underscores the evolving regulatory landscape for e-commerce in India. The government is actively working to ensure a fair and competitive environment for businesses, particularly in the rapidly growing digital sector. This investigation, along with the CCI findings, signals the government's commitment to holding large companies accountable for compliance with Indian laws and regulations.
Source: ED to question Amazon, Flipkart officials over alleged foreign investment law violations: Report