Insight Online News
New Delhi, Aug 8 : As the Enforcement Directorate (ED) has served notices to e-commerce major Flipkart and its founders over alleged violation of foreign exchange norms, the Confederation of All India Traders (CAIT) has said that similar notices should also be sent to Walmart-backed Amazon.
“The notice sent by the Enforcement Directorate to Flipkart is a much-awaited right step. Both Amazon and Flipkart are conducting a preferential seller system on their respective marketplace which is against the FDI in e-commerce policy for which CAIT has been raising its voice since a long time. We demand the Enforcement Directorate to send similar notice to Amazon also since both Amazon and Flipkart are sailing in the same boat,” said CAIT Secretary General Praveen Khandelwal.
The traders’ body lauded the ED’s move and said that violation of laws during 2016-2021 by both Amazon and Flipkart needs to be investigated.
Khandelwal said that ED should not only impose heavy fine and penalty but also recommend the government to ban portals of both Amazon and Flipkart till the time they follow the FDI laws both in letter and spirit.
He said that that under the FDI in e-commerce policy, the foreign funded companies could act as a marketplace providing only technology facilitation and cannot sell the goods directly or indirectly whereas these companies were acting in inventory mode, as well which is prohibited under the policy.
The ED issued notices to Flipkart, its founders and nine others in connection with foreign exchange violation case.
According to financial probe agency sources, in the notice they have asked to explain why they should not face a penalty of $1.35 billion for alleged violation of foreign investment laws.
The sources said that Flipkart and its other holding firms including one in Singapore violated Foreign Exchange Magamenet Act (FEMA) while attracting foreign investments between 2009 and 2015.
According to the ED, the investigating agency has found that WS Retail, a firm incorporated in 2009 to transact with customers, was allegedly acting as a front for retail operations of Flipkart Online Services, incorporated in 2008.
The ED investigation started after the RBI had raised the issue.
In 2018, Walmart took a majority stake in Flipkart. Sachin Bansal sold his stake to Walmart during the deal, while Binny Bansal retained a small stake.
Flipkart has said that it has been compliant to the Indian laws and will cooperate with the authorities in the matter which pertains to 2009-2015.
Responding to a query on the notice, the company had said in a statement: “Flipkart is in compliance with Indian laws and regulations, including FDI regulations. We will cooperate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice.”
IANS / AGENCY