The All India Traders Federation welcomed ED’s action. (representative)
New Delhi:
The Enforcement Directorate on Thursday conducted searches on some “major vendors” operating on the platforms of e-commerce giants Amazon and Flipkart as part of a probe into “irregularities” in foreign direct investment, official sources said.
Sources said that as part of the operation, these “preferred” suppliers are located in Delhi, Gurugram and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Kalaya). A total of 19 locations in Nataka (Nataka) are covered.
It is understood the ED inspected documents from about six unnamed vendors and made copies of some documents.
Sources said the federal agency has initiated an investigation under provisions of the Foreign Exchange Management Act (FEMA) after receiving multiple complaints against the two major e-commerce companies for allegedly “violating foreign direct investment in India.” (Foreign Direct Investment) Regulations”. direct investment) by directly or indirectly affecting the sales price of goods or services without providing a level playing field for all suppliers”.
Neither e-commerce company immediately responded.
The Confederation of All India Traders (CAIT) welcomed ED’s action.
“CAIT along with several other trade bodies have been raising these issues over the past few years. I welcome the Enforcement Directorate,” CAIT general secretary and BJP MP Praveen Khandelwal said in a statement action is a step in the right direction.
He claimed that the Competition Commission of India (CCI) also issued “penalty notices” to Amazon and Flipkart and their “preferred” sellers for “engaging” in anti-competitive practices that adversely affected small merchants and ‘kiranas’. )shop.
As per existing rules, 100% FDI is allowed through the automatic route in the e-commerce marketplace model. However, overseas investment is not allowed under the stock model.
In the marketplace model, e-commerce entities can only provide third-party seller platforms but cannot own inventory. They also cannot directly or indirectly affect the price of goods.
It has been reported in the past that the CCI is committed to ensuring fair business practices across sectors in the market and is already investigating alleged anti-competitive practices by e-commerce companies.
CAIT and Mainstream Action Retailers Association AIMRA had also earlier petitioned the CCI seeking immediate suspension of operations of Flipkart and Amazon as they alleged that the companies were engaging in predatory pricing and burning cash to offer deep discounts on products.
They said these practices in turn created a gray market for mobile phones, causing financial losses “because gray market participants evade taxes.”
Commerce and Industry Minister Piyush Goyal recently raised the same concerns over Amazon’s announcement of a $1 billion investment in India, saying the US retailer was not doing any great service to the Indian economy. It is making up for the losses it has suffered in India.
He had said in August that their huge losses in India “smacked of predatory pricing” which was bad for the country as it affected tens of millions of small retailers.
Goyal said e-commerce companies are cannibalizing small retailers’ high-value, high-margin products that are the only products mom-and-pop shops rely on to survive.
The minister has said that with the rapid growth of the country’s online retail industry, “whether the large-scale growth of e-commerce will cause huge social chaos”.
Khandelwal said CAIT has urged the CCI and ED to protect the businesses of small traders.
“In the new India led by Prime Minister Modi, no one is above the law. I hope the law will now take the right path and protect the livelihood of small shopkeepers.
“This government is committed to ensuring that no entity can harm the trading community. In response to multiple complaints raised by the trade community regarding FDI irregularities and anti-competitive behavior by fast commerce companies such as Blinkit, Swiggy and Zepto, we urge the CCI and ED took prompt action to prevent any further and irreparable damage to the small traders’ businesses.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
