November 7 : According to sources who spoke to Moneycontrol , the Enforcement Directorate (ED) has searched major suppliers for e-commerce giants Amazon and Flipkart throughout India. A number of complaints against Amazon and Flipkart, e-commerce companies that operate marketplaces, alleging that they are breaking FDI regulations by either directly or indirectly influencing the sale price of goods or services and failing to provide fair competition for all vendors prompted ED to launch its Foreign Exchange Management Act (FEMA) investigation.
According to News 18, some of the companies connected to Amazon and Flipkart that are being investigated are Appario Retail, Shreyash Retail, Darshita Retail, and Ashiana Retail. According to sources who spoke to Moneycontrol, the searches were carried out at 19 locations in Delhi, Bengaluru, Mumbai, Hyderabad, and Panchkula (Haryana). Moneycontrol’s questions were not answered by Flipkart at the time this article was published.
According to PTI, the action has to do with the financial transactions carried out by some of the “preferred” sellers and vendors who conduct business on e-commerce sites such as Amazon and Flipkart.
Weeks after the Competition Commission of India discovered that the two businesses and their vendors had broken competition laws by favoring certain sellers on their platforms, the searches were conducted. Both businesses have insisted that they abide by Indian law.
“India is a thriving democracy governed by the rule of law and its Constitution,” stated Praveen Khandelwal, MP, Chandni Chowk, and Secretary General, Confederation of All India Traders (CAIT). These laws cannot be disregarded or circumvented by anyone. For the past few years, CAIT and a number of other trade associations have been bringing up these concerns. Since ED’s actions are a positive step, I applaud them. Amazon, Flipkart, and their preferred sellers were previously also hit with penalty notices from the CCI for anti-competitive behavior that had a negative impact on Kirana stores and small business owners.
“No one is above the law in Prime Minister Narendra Modi’s new Bharat. I am optimistic that the law will now follow its proper path and safeguard small business owners’ livelihoods. This government is dedicated to making sure that the trading community cannot be harmed by anyone. We call on the CCI and the ED to act quickly in response to numerous complaints from the trading community about FDI violations and the anti-competitive behavior of quick-commerce companies like Blinkit, Swiggy, and Zepto in order to stop additional, irreversible harm to small traders’ businesses.”
Together, Chief Patron P M Ganesh Ram and National President Dhairyashil Patil of the All India Consumer Products Distributors Federation (AICPDF) stated: “This government action gives traders confidence that their voice has been heard. We hope that the law will act as it should to protect small business owners from unfair business practices. The AICPDF calls on the ED and the CCI to take immediate action to protect traditional retail from additional harm and to guarantee fair competition in the market.
For Amazon and Flipkart, which view India as a major growth market with rapidly increasing e-commerce sales, the raids represent their most recent setback. In August, Piyush Goyal, the minister of commerce, publicly criticized Amazon, claiming that its investments in India were frequently used to offset its business losses, which “smell of predatory pricing.”
