The Enforcement Directorate (ED) has conducted pan-India search at main vendors of e-commerce majors Amazon and Flipkart, sources told Moneycontrol on November 7. ED initiated its Foreign Exchange Management Act (FEMA) investigation based on several complaints against Amazon and Flipkart, the e-commerce entities providing marketplace, that they are violating FDI rules by directly or indirectly influencing the sale price of goods or services and not providing level playing field for all the Vendors.
Appario Retail, Shreyash Retail, Darshita Retail, Ashiana Retail are some of the entities related to Amazon and Flipkart that are under the scanner, reported News 18.
The searches were conducted at 19 premises located at Delhi, Bengaluru, Mumbai, Hyderabad and Panchkula (Haryana), sources told Moneycontrol.
Flipkart did not respond to Moneycontrol's queries by the time of publishing this article.
PTI reported that the action is related to the financial transactions being done by some of the "preferred" vendors and sellers who do business through Amazon and Flipkart like e-commerce platforms.
The searches come weeks after Competition Commission of India found the two companies and their sellers violated competition laws by giving preference to select sellers on their platforms. Both companies have maintained they comply with Indian laws.
Praveen Khandelwal, MP, Chandni Chowk, and Secretary General, Confederation of All India Traders (CAIT) said: "India is a vibrant democracy governed by the rule of law and its Constitution. No one can be allowed to bypass or disregard these laws. CAIT, along with several other trade bodies, has been raising these issues for the past few years. I welcome ED’s actions as a step in the right direction. Earlier, the CCI also issued penalty notices to Amazon, Flipkart, and their preferred sellers for engaging in anti-competitive practices that have adversely affected small traders and Kirana stores.
"In the new Bharat, led by Prime Minister Narendra Modi, no one is above the law. I am hopeful that now the law will take its rightful course and protect the livelihoods of small shopkeepers. This government is committed to ensuring that no entity can harm the trading community. In response to multiple complaints filed by the trading community regarding FDI violations and the anti-competitive practices of quick-commerce companies such as Blinkit, Swiggy, and Zepto, we urge both the CCI and the ED to take swift action to prevent any further, irreparable damage to the businesses of small traders."
AICPDF (All India Consumer Products Distributors Federation) National President Dhairyashil Patil and Chief Patron P M Ganesh Ram jointly said: “This step by the government instills confidence that the trading community’s voice has been heard. We are hopeful that law will take its rightful course to safeguard small traders from anti-competitive practices. AICPDF urges both the CCI and the ED to act swiftly to prevent further harm to traditional retail and ensure fair competition across the market."
The raids are the latest setback for Amazon and Flipkart, which count India as a key growth market where e-commerce sales are rapidly rising.
Commerce Minister Piyush Goyal, in August, publicly slammed Amazon, saying its investments in India have often been used to cover its business losses, adding that such losses "smell of predatory pricing."
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