India’s financial crime agency intends to summon Flipkart and Amazon executives in a widening investigation into possible infractions of foreign investment regulations. The latest initiative comes after some sellers on the two e-commerce platforms were raided, the source said.
The added scrutiny reflects fast-growing sales in India’s $70 billion e-commerce market, where both Walmart-owned Flipkart and Amazon have become major players raising regulatory worries. According to Reuters, an antitrust investigation has also revealed violations by the two companies regarding favoritism toward some sellers.
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ED to Summon Amazon, Flipkart Executives as Regulatory Scrutiny Intensifies
The Enforcement Directorate has been probing allegations against both Amazon and Flipkart, who have repeatedly maintained they adhere to the laws of India. The claims relate to those companies controlling supplies of goods through certain sellers. Foreign e-commerce platforms cannot hold inventory under Indian regulations and can only act as marketplaces for sellers.
Last week, after conducting raids on Amazon and Flipkart sellers, the Directorate decided to summon an internet company executive and is also reviewing various documents that the Directorate had seized during those operations. Searches that continued on Saturday have reportedly reinforced allegations of foreign investment violations. It will also examine industry and seller data for the last five years.
According to Datum Intelligence, Flipkart held a 32% market share and Amazon 24% of India’s e-commerce market last year, which represents roughly 8% of the $834 billion retail sector. The raids were prompted by findings from an antitrust investigation that claimed the platforms exercised full control over inventory, with sellers merely lending their names.
Sources with knowledge of the matter confirmed that at least two Amazon sellers and four Flipkart sellers were raided. One such seller, Appario, previously Amazon’s largest Indian seller, was among those targeted. Appario, which benefited from discounted fees and special access to Amazon’s global tools, did not respond to requests for comment. The growing scrutiny of online platforms in India follows increasing concerns over unfair business practices affecting smaller businesses.
FAQs
Why is the ED summoning Amazon and Flipkart executives?
The ED is investigating potential violations of foreign investment laws and unfair business practices.
What prompted the investigation into Amazon and Flipkart?
Raids on sellers linked to both companies and antitrust findings led to regulatory scrutiny.
