Indian Regulators To Summon Amazon, Flipkart Executives As Scrutiny On Ecommerce Tightens: Report

The report said that an antitrust investigation found that these two firms violated laws by favouring certain sellers. Meanwhile, the companies have asserted that they comply with the domestic laws

Indian authorities will reportedly summon Flipkart and Amazon executives as investigation enhances in the alleged foreign investment law violations, media reports said. The financial crime agency will call on the executives of the ecommerce companies as they step up the investment, reports said citing a senior government source.

According to a report by Reuters, the action highlights increasing regulatory watch on these companies while they clock a massive jump in their sales and the e-commerce market in India crosses $70 billion.

The report said that an antitrust investigation found that these two firms violated laws by favouring certain sellers. Meanwhile, the companies have asserted that they comply with the domestic laws.

However, the Enforcement Directorate for years has been continuing its investigation in the allegations levied against these firm that they exert control over the inventory of goods via select sellers.

The Indian laws bar foreign e-commerce firms from holding an inventory of products that they can sell on their website. This essentially forces these players to operate via a marketplace of sellers.

The report cited a senior government source directly involved in the matter and said that the Directorate raided Amazon and Flipkart sellers last week and now the agency plans to call on the executives from these companies. Currently, the officials are reviewing documents seized in the raid.  

The raid operation continued till Saturday and the searches proved that foreign investment rules were violated, the source said. The report further stated that the Directorate will also look into business data from sellers and their dealing with these companies in at least the last five years.

 Currently, Flipkart controls a 32 per cent share in the Indian e-commerce market, while Amazon accounts for a 24 per cent share in the space, estimates from Datum Intelligence revealed.

Notably, scrutiny on online shopping and delivery platforms in India has been on the rise as more complaints come in stating that unfair business practices hurt smaller players in the market.