The ED notice comes at a time when the CCI is conducting its own investigation into Amazon and Flipkart while the government proposes regulatory changes to address the alleged practices. We missed this earlier: India's Enforcement Directorate (ED) had sent a notice to Flipkart and its founders in July asking them to explain why they should not face a ₹10,000 crore ($1.35 billion) fine for alleged violation of foreign investment rules, Reuters reported on August 5. While retailer bodies have frequently accused Amazon and Flipkart of violating Foreign Direct Investment (FDI) regulations, the ED notice is one of the few instances where a law enforcement agency has made the same accusation and is willing to reprimand the company for it. What was the ED notice regarding? Violations concerning WS Retail: Flipkart and Amazon have been under an ED investigation for years for allegedly bypassing India's foreign investment regulations, which state that e-commerce entities with foreign investment can only operate as a marketplace for third-party sellers and cannot hold and sell their own inventory to consumers. An ED official told Reuters that the notice was regarding Flipkart selling goods to consumers through a related party, WS Retail, which is prohibited according to the regulations. Another official told NDTV that Flipkart violated the Foreign Exchange Management Act (FEMA) while attracting foreign investments between 2009 and 2015. What is WS Retail? Founded in 2009 by Flipkart founders Sachin Bansal and Binny Bansal, who later sold it to investors, WS Retail was once the largest seller on…
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