The Enforcement Directorate on Thursday conducted searches against some “key sellers” operating on e-commerce platforms of giants like Amazon and Flipkart as part of the foreign investment “violations” probe. As part of the action, a total of 19 premises of these “preferred” vendors located in Delhi, Gurugram and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) were searched, official sources said.
Sources said the federal agency had initiated the investigation under the provisions of the Foreign Exchange Management Act (FEMA) while acting on multiple complaints against the two big e-commerce companies alleging that they were involved in the sale of goods or services. are violating India’s FDI (Foreign Direct Investment) rules by directly or indirectly influencing the price and not providing level playing field to all sellers”.
It has been reported in the past that the Competition Commission of India (CCI), which works to ensure fair business practices across all sectors in the market, is already investigating the alleged anti-competitive practices of e-commerce companies.
Confederation of All India Traders (CAIT) and leading mobile retailers’ organization AIMRA had also petitioned the CCI some time ago, demanding immediate suspension of the operations of Flipkart and Amazon as they alleged that these companies were offering huge discounts on the products. The hunters were engaged in price fixing and burning of cash to make ends meet. These practices, in turn, are creating a gray market of mobile phones, causing losses to the government exchequer “because players in the gray market evade taxes”, he had said.
Commerce and Industry Minister Piyush Goyal recently raised similar concerns as he questioned Amazon’s announcement of a USD 1 billion investment in India, saying the US retailer is not providing any major service to the Indian economy. It is doing, rather it is compensating for the loss caused to the country. He had said in August that their huge losses in India smack of “predatory pricing”, which is not good for the country as it impacts crores of small retailers.
Goyal said e-commerce companies are eating away at smaller retailers’ high-value, high-margin products, which are the only items by which mom-and-pop stores survive. The minister had said that with the rapidly growing online retail trade in the country, “are we going to create huge social disruption with this massive growth of e-commerce”.