India to summon Amazon, Flipkart over breaches of foreign investment law: Report

PTC News Desk: The government plans to summon executives from Flipkart and Amazon as part of a deeper investigation into possible breaches of foreign investment regulations, according to Reuters.

This move follows previous raids on multiple sellers linked to the two e-commerce platforms, according to a senior government source mentioned in the report. The action shows the increased regulatory scrutiny faced by Walmart-owned Flipkart and Amazon, both of which are rapidly expanding in India's Rs 70 billion e-commerce business. According to media sources, an antitrust probe had previously found that both platforms broke laws by favouring specific sellers.

While Amazon and Flipkart have often stated that they follow the law, the Enforcement Directorate has been investigating allegations for several years that both businesses control inventory through chosen vendors, which breaches regulations.

These rules prohibit foreign e-commerce companies from keeping goods, allowing them to operate only as a marketplace for sellers. Following last week's raids on Amazon and Flipkart sellers, the agency intends to summon executives from the businesses and is currently reviewing documents obtained during the operation, according to a senior government source familiar with the issue.

According to the official source, the searches, which lasted till Saturday, revealed violations of foreign investment regulations. The Directorate will now analyse the sellers' business records and their dealings with e-commerce platforms during the last five years, the official added.