India’s financial crime agency Enforcement Directorate is set to summon executives from e-commerce giants Amazon and Flipkart as an investigation intensifies into alleged violations of foreign investment laws, Reuters reported.
This action follows recent raids on some sellers associated with these e-commerce companies, highlighting the increasing regulatory scrutiny they face in India’s $70bn e-commerce market.
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The planned summons indicates a significant escalation in oversight as both Walmart-owned Flipkart and Amazon experience rapid sales growth.
An antitrust investigation has also revealed that the companies breached laws by favouring specific sellers, according to reports from Reuters.
Both Amazon and Flipkart assert that they comply with Indian regulations; however, the Enforcement Directorate has been investigating claims for several years that these companies wield control over inventory via select sellers.
Indian legislation prohibits foreign e-commerce entities from holding an inventory of goods for sale on their platforms, requiring them to operate solely as marketplaces for sellers.
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By GlobalDataFollowing the raids conducted by the directorate on sellers affiliated with Amazon and Flipkart last week, the agency plans to summon company executives.
It is currently reviewing documents seized during the operation, the news agency cited a senior government source involved in the case.
The directorate will further analyse business data from sellers and their interactions with the e-commerce companies over at least the past five years.
The raids continued until 9 November and have provided evidence of potential violations of foreign investment rules, as stated by the unnamed source.
One source noted that Appario, once Amazon’s largest seller in India, was among those raided last week.
Appario was reportedly referred to internally as a “special” merchant, receiving discounted fees and access to global retail tools for inventory management that were not available to other sellers.
In a separate development, Amazon is reportedly developing smart eyeglasses designed for its delivery drivers.
According to Reuters, these glasses aim to assist drivers in navigating buildings during deliveries, potentially smoothing the final stretch of an order’s journey to customers’ homes.
If successful, the glasses would provide turn-by-turn navigation on a small, embedded screen along routes and at each stop.
