New Delhi – The Government of india may issue summons to e-commerce platforms Amazon and Flipkart for questioning in case of violation of Foreign Direct Investment (FDI) rules. Sources said, based on the investigation of the documents found during the raid at Amazon and Flipkart sellers last week, the Enforcement Directorate (ED) is preparing to call the officials of both the companies. The business data of the sellers and the transactions done with the e-commerce platforms in the last five years will also be investigated.
Officials gave information
The search operation continued till Saturday at two big sellers of Amazon and four big sellers of Flipkart. The documents found proved that foreign investment rules have been violated. The raid revealed that both the platforms had end-to-end control over the inventory and the sellers were just names.
Investigation revealed
A Reuters investigation based on Amazon’s internal papers in 2021 revealed that the companies have significant control over the inventory of some of the largest sellers. In fact, small traders are being harmed due to the anti-competitive business practices of Amazon and other companies, so they are being monitored. Recently, the ED raided the sellers of both the companies on charges of benefiting select sellers.
Special benefit given to Appario
One of the sources said on Monday, Appario, once Amazon’s largest Indian seller, was also raided last week. Appario was internally described as a special merchant. Appario was benefited for using things like inventory management unlike other sellers.
Foreign companies cannot keep inventory in India
According to the rules, foreign e-commerce platforms cannot keep inventory in India. They can only operate as an online marketplace. Amazon and Flipkart’s sales are growing rapidly in India’s e-commerce market of about Rs 5.91 lakh crore. Datum Intelligence estimates that Flipkart has 32 per cent and Amazon has 24 per cent market share in Indian e-commerce last year. This is 8 per cent of the country’s total retail market of $834 billion.
Investigation is also going on against Zomato and Swiggy
On the other hand, the Competition Commission of India is investigating online food delivery platforms Zomato and Swiggy for violation of competition rules. Both of them are accused of benefiting select restaurant chains.
However, both the companies have termed the news of the investigation as misleading. Along with this, Zomato said that it follows the laws of the country. The Commission has not passed any order since the information of April 5, 2022. At the same time, Swiggy says that it is committed to follow the rules.
