India’s Enforcement Directorate (ED) conducted surprise raids on Thursday, November 7 at offices of sellers linked to Amazon and Flipkart, amid growing scrutiny of e-commerce platforms.
Amazon & Flipkart sellers under radar due to violation of act
According to Reuters, the search operations were linked to a probe into alleged violations of the Foreign Exchange Management Act (FEMA). The raids took place at the offices of select sellers in New Delhi, Mumbai, and Bengaluru, as reported by ED officials. News agency PTI also reported that the raids were conducted in Gurugram and Hyderabad.
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While talking to ET, a government official stated, “The raids on sellers of Amazon and Flipkart is a part of ED’s probe … for alleged violations of foreign exchange laws.” The ED has increased scrutiny on Amazon and Flipkart due to financial transactions made by “preferred” vendors and sellers on their platforms.
CCI instructs Amazon & Flipkart to submit Q2 results
This development follows reports from months ago stating that the Competition Commission of India (CCI) found Amazon and Flipkart violated competition laws by favouring select sellers on their platforms. The antitrust watchdog then instructed the companies to submit their recent financial statements to determine the penalties to be imposed.
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Notably, the Indian government is under pressure to regulate e-commerce platforms, particularly Amazon and Flipkart, due to concerns about unfair business practices. Recently, Praveen Khandelwal of the Confederation of All India Traders (CAIT) urged the government to suspend these platforms’ operations, citing harm to India’s manufacturing sector. He’s pushing for stricter rules to ensure fair competition and prevent monopolies.
Regardless of regulatory pressure, Amazon and Flipkart continue to grow in India’s e-commerce market. Recently, Amazon’s Great Indian Festival 2024 saw 140 crore customer visits, while Flipkart recorded 720 crore engagements during the festive season.
