Flipkart has confirmed this resignation to Medianama, although it didn’t disclose who will replace Singh as the company’s CFO. Its also not clear as to where Singh is headed next. Singh had joined Flipkart in January 2012 and had been with the company for only an year. Prior to this, he was serving as the Vice President (Finance) & Managing Director at Sapient Corporation Pvt. Ltd and has had stints at Dell, Moser Baer, Ariba and Yum Brands.
Enforcement Directorate Raid At Flipkart
This resignation comes amid the Enforcement Directorate raid on Flipkart’s offices on November 30, to investigate alleged violation of FDI regulations, although Flipkart had denied that any such raid took place.
Indian government had referred Flipkart and Bharti Walmart to the Enforcement Directorate for alleged violation of FDI regulations in November 2012. Even the Minister of State for Commerce & Industry Dr. S. Jagathrakshakan, had mentioned in a written reply to a question in the Lok Sabha, that the Reserve Bank of India had informed that matters related to Bharti Wal-Mart/ Cedar Support Services Limited and M/s Flipkart Online Services Pvt. Limited, respectively, had been referred to the Directorate of Enforcement for further investigation, and that violation of FDI regulations was covered by the penal provisions of the Foreign Exchange Management Act, 1999 (FEMA).
FDI In Retail
Earlier in 2012, the Government had permitted Foreign Direct Investment in multi brand retail upto 51%, but had clarified that the policy did not extend to e-commerce. In a press note, the government had clearly stated that “Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multibrand retail trading.”.
During our #Nama conference, Flipkart co-founder & COO, Binny Bansal had stated that nothing had changed on the e-commerce segment with the new FDI rules. However, he had avoided commenting on the legality of e-commerce businesses operating by bypassing FDI regulations, and had said that the company complied with the regulations. More on that here.
On a related note, MediaNama along with Arkay & Arkay had recently released a free paper explaining the structuring of investments eCommerce businesses in India and a simplified overview of the government rules that cover FDI in multi brand retail and eCommerce, in order to educate entrepreneurs and investors about the many different structures that are being used by Indian E-commerce businesses to raise investment.