ED Conducts Searches on Amazon and Flipkart Vendors Over Alleged FDI Violations
The Enforcement Directorate (ED) conducted searches at 19 locations on Thursday, investigating key vendors of Amazon and Flipkart across Delhi, Bengaluru, Mumbai, Hyderabad, and Panchkula. The searches are part of a probe under the Foreign Exchange Management Act (FEMA), initiated after several complaints that the e-commerce giants allegedly violated Foreign Direct Investment (FDI) rules by influencing the pricing of goods, thus creating an unlevel playing field for vendors on their platforms.
In a statement, the ED highlighted concerns about Amazon and Flipkart’s marketplace practices, with accusations that the companies directly or indirectly control prices, favor specific vendors, and undermine competition. An antitrust report from the Competition Committee of India (CCI) further supported these allegations, noting that preferred sellers were often given higher visibility, pushing out other vendors. Neither Amazon nor Flipkart has yet responded to the allegations.
The probe follows years of scrutiny into the business models of foreign e-commerce players in India, with government officials like Commerce Minister Piyush Goyal criticizing Amazon’s investments in India, calling them a cover for “predatory pricing.” A 2021 Reuters investigation revealed Amazon’s influence over its top vendors, despite Indian laws that prohibit foreign firms from holding inventory.
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