ED to summon Amazon, Flipkart executives as regulatory scrutiny grows

Enforcement Directorate will summon Flipkart and Amazon executives as it steps up an investigation into alleged foreign investment law violations, days after raiding some of e-commerce firms' sellers, a senior government source said. planned action signals growing regulatory scrutiny of Walmart-owned Flipkart and Amazon when ir sales are rapidly growing in India's $70 billion e-commerce market. An Indian antitrust investigation also found two companies breached laws by favouring select sellers, Reuters has reported.

Amazon and Flipkart have maintained y comply with Indian laws, but Enforcement Directorate has for years been investigating allegations companies, through select sellers, exert control over inventory of goods.

Indian laws prohibit foreign e-commerce players from holding inventory of goods y can sell on ir website, forcing m to only operate a marketplace of sellers.

After last week's raids by Directorate on Amazon and Flipkart sellers, federal agency now plans to summon company executives, and is currently reviewing documents seized from sellers during operation, a senior government source directly involved in case said on Monday. searches went on until Saturday and have substantiated re were foreign investment rule violations, said government source, who declined to be named as details of raids have not been disclosed publicly.

Directorate will also analyse business data from sellers and ir dealings with e-commerce companies in at least last five years, official ded.

Amazon, Flipkart and Enforcement Directorate, did not immediately respond to Reuters' queries.

'End-to-end control'

Datum Intelligence estimates Flipkart h a 32 per cent market share and Amazon a 24 per cent share last year in Indian e-commerce, which roughly accounts for 8 per cent of $834 billion retail sector.

latest raids were triggered by Amazon and Flipkart antitrust investigation findings that said platforms "h end-to-end control over inventory and sellers are just name lending enterprises."

Two or sources with direct knowledge of matter said at least two of Amazon's sellers and four of Flipkart's sellers were raided last week.

A Reuters investigation in 2021, based on internal Amazon papers, showed company exerted significant control over inventory of some of biggest sellers, even though Indian laws prohibit foreign players from doing so.

One of sources said on Monday that Appario, once Amazon's biggest Indian seller, was among those raided last week, when officials inspected financial books and questioned executives about ir dealings with US-based e-commerce giant.

Appario was internally referred to as a "special" merchant and received discounted fees and access to Amazon global retail tools used for things like inventory management, unlike or sellers, Reuters investigation in 2021 found.

Appario did not respond to a request for comment.

Online shopping and delivery platforms face growing scrutiny in India due to complaints of unfair business practices that hurt smaller players. Reuters reported last week antitrust body also found food delivery giants Zomato and Swiggy breached laws as y favoured select restaurants on ir apps.