- Thursday, November 07, 2024
The directorate had received several complaints against the e-commerce giants for alleged violation of India’s foreign direct investment rules
By: Shajil Kumar
THE Enforcement Directorate Thursday conducted searches against some of the “main vendors” operating on platforms of e-commerce giants Amazon and Flipkart as part of a foreign investment “violation” investigation, official sources said.
A total of 19 premises of these “preferred” vendors located in Delhi, Gurugram and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) were covered as part of the action, the sources said.
The ED inspected documents and took copies of some from the premises of about six such vendors who were not named.
The sources said a probe has been initiated by the federal agency under the provisions of the Foreign Exchange Management Act (FEMA) after it received several complaints against the two large e-commerce companies where it is alleged that they were “violating India’s FDI (foreign direct investment) rules by directly or indirectly influencing the sale price of goods or services and not providing level playing field for all the vendors”.
There was no immediate response from the two e-commerce companies.
Traders welcome move
Meanwhile, the Confederation of All India Traders (CAIT) welcomed the ED action.
“The CAIT, along with several other trade bodies, has been raising these issues for the past few years. I welcome the Enforcement Directorate’s actions as a step in the right direction,” CAIT secretary general and BJP MP from Delhi Praveen Khandelwal said in a statement.
He claimed that the the Competition Commission of India (CCI) had also issued “penalty notices” to Amazon and Flipkart, and their “preferred” sellers, for “engaging” in anti-competitive practices that have adversely affected small traders and ‘kirana’ (grocery) stores.
It has been reported in the past that the CCI, which works to ensure fair business practices across sectors in the marketplace, is already looking into alleged anti-competitive ways of e-commerce companies.
The CAIT and mainline mobile retailers’ association AIMRA had also petitioned the CCI sometime back seeking immediate suspension of operations of Flipkart and Amazon as they alleged that the companies engaged in predatory pricing and were burning cash to offer heavy discounts on products .
These practices, in turn, are creating a grey market of mobile phones, causing losses to the exchequer “as players in the grey market evade taxes”, they had said.
Minister’s concern
Commerce and Industry Minister Piyush Goyal had recently flagged the same concerns as he had questioned Amazon’s announcement of $1 billion investment in India, saying the US retailer was not doing any great service to the Indian economy but filling up for the losses it had suffered in the country.
He had said in August that their huge losses in India “smells of predatory pricing”, which is not good for the country as it impacts crores of small retailers.
Goyal said e-commerce companies were eating into the small retailers’ high-value, high-margin products that are the only items through which the mom-and-pop stores survive.
The minister had said that with the fast-growing online retailing in the country, “are we going to cause huge social disruption with this massive growth of e-commerce”.
Khandelwal said that the CAIT has urged the CCI and the ED to protect the businesses of small traders.
“I am hopeful that the law will take its rightful course and protect the livelihoods of small shopkeepers,” he said in the statement. (PTI)
