NEW DELHI: The Enforcement Directorate (ED) on Thursday carried out searches at 19 premises linked to some “main” sellers using Amazon and Walmart-owned Flipkart platforms in connection with its probe into alleged violation of foreign investment rules, people familiar with the development said.
The people said the searches were conducted in Delhi, Bengaluru, Mumbai, Hyderabad and Panchkula.
A senior ED official said the raids were part of the agency’s probe for violations of the provisions of the Foreign Exchange Management Act (FEMA).
“ED initiated a FEMA probe based on several complaints against Amazon and Flipkart, the e-commerce entities… that they are violating FDI rules by directly or indirectly influencing the sale price of goods or services and not providing a level-playing field for all vendors,” said the senior official, who didn’t want to be named.
The official underlined that the searches took place on premises linked to the “main vendors” of Flipkart and Amazon, and not the two e-commerce giants themselves.
Amazon and Flipkart are yet to respond to requests for their comments.
The searches come more than a month after the anti-trust body, Competition Commission of India (CCI), said Amazon and Flipkart had engaged in anti-competitive practices by favouring select sellers on their platforms.
ED has been investigating the two companies for alleged violation of foreign exchange law since 2019.
A second ED official who spoke on conditions of anonymity said the financial crimes probe agency had taken the CCI’s findings into account.
CCI started investigating the two e-commerce giants in 2019 when traders body Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), petitioned against Amazon and Flipkart, saying the platforms favour some sellers over others.
Praveen Khandelwal, member of parliament from Chandni Chowk and CAIT secretary general welcomed the raids. “I welcome the 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,” he said in a statement.
Khandelwal added that the trading community had filed multiple complaints regarding FDI violations and anti-competitive practices against quick-commerce companies as well.