CAIT seeks action against Amazon for alleged FEMA violation

The Confederation of All India Traders (CAIT) on November 4 demanded action against Amazon for alleged violation of various sections of the Foreign Exchange Management Act (FEMA) that helped it amass Rs 40,000 crore.

In a letter to Union Commerce and Industry Minister Piyush Goyal, the CAIT has sought an investigation against Amazon.com, Amazon Inc, Amazon.com NV Investments Holdings LLC and Amazon India Limited (collectively “Amazon”).

The CAIT alleges that Amazon is indirectly acquiring Future Retail Ltd.

“Over the past few months, our organisation has been examining various public documents pertaining to the investments by Amazon and it has come to light that Amazon has been conducting its activities in blatant violation of Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“FEMA Rules”), the CAIT letter alleged.

“Under FEMA Rules, Foreign Direct Investment (FDI) in multi-brand retail is allowed only with prior approval of the government of India and numerous conditions may be imposed on the entrant with respect to, inter alia, the sourcing and retailing of goods,” the letter said.

As per the CIAT complaint “Amazon is a repeat offender”. In the past, the letter alleged, Amazon has indirectly invested in and taken control of More Retail Ltd, earlier owned by the Aditya Birla Group, and later bought by one Witzig Advisory Services Private Ltd in 2018. Amazon, thereafter, invested in Witzig and as a result of certain internal arrangements, it now effectively controls MRL, the letter said.

“CAIT has been diligently monitoring Amazon’s illegal actions and has, in the past, also approached the Hon'ble High Courts seeking investigations. The CAIT has filed a writ petition before the Hon'ble Delhi High Court seeking, inter alia, a writ directing the Enforcement Directorate to inquire into the violations of FEMA. By its order dated 05.09.2018, and based on the statement by the Enforcement Directorate, the Hon'ble High Court observed that the averments in the petition will be considered by the Enforcement Directorate and an investigation would be undertaken if warranted. The investigation is still pending. In another writ petition filed in Rajasthan over violation of FDI norms, notice has been issued,” the letter said.

The CAIT is India’s largest trading association, representing the interests of over 6 crore small and medium businesses.

Moneycontrol reached out to Amazon and the article will be updated when the company responds.