The government may issue summons for inquiry to e-commerce platforms Amazon and Flipkart. The government will issue summonses to executives of these companies as part of an investigation into violations of foreign investment laws, Reuters quoted sources as saying.
Recently, the Enforcement Directorate (ED) raided some sellers associated with these companies. It is alleged that the companies control the inventory (stock) through some selected vendors.
The ED is now preparing to summon company officials after raiding Amazon and Flipkart sellers last week. The ED is also probing the documents found during the raids.
- The probe, which lasted until Saturday, found the government's allegations of violating foreign investment rules to be true.
- The ED will also examine the sellers' business data and their communications with these e-commerce platforms in the last 5 years.
A foreign e-commerce platform can act as a marketplace
As per Indian regulations, foreign e-commerce platforms cannot hold inventory in India, they can only operate as online marketplaces. Amazon and Flipkart are growing fast in India's $70 billion (roughly Rs 5.91 lakh crore) e-commerce market. According to Datum Intelligence, Flipkart had a 32% market share last year and Amazon had a 24% market share in the Indian e-commerce sector.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
