The Enforcement Directorate Thursday conducted searches against some of the "main vendors" operating on platforms of e-commerce giants Amazon and Flipkart as part of a foreign investment "violation" investigation, official sources said.
A total of 19 premises of these "preferred" vendors located in Delhi, Gurugram and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) were covered as part of the action, the sources said.
It is learnt that the ED inspected documents and took copies of some from the premises of about six such vendors who were not named.
The sources said a probe
has been initiated by the federal agency under the provisions of the Foreign Exchange Management Act (FEMA) after it received several complaints against the two large e-commerce companies where it is alleged that they were "violating India's Foreign Direct Investment (FDI) rules by directly or indirectly influencing the sale price of goods or services and not providing level playing field for all the vendors".
There was no immediate response from the two e-commerce companies.
Meanwhile, the Confederation of All India Traders (CAIT) welcomed the ED action.
"The CAIT, along with several other trade bodies, has been raising these issues for the past few years. I welcome the Enforcement Directorate's actions as a step in the right direction," CAIT secretary general and BJP MP from Delhi Praveen Khandelwal said in a statement.
He claimed that the the Competition Commission of India (CCI) had also issued "penalty notices" to Amazon and Flipkart, and their "preferred" sellers, for "engaging" in anti-competitive practices that have adversely affected small traders and 'kirana' (grocery) stores.
The CAIT and mainline mobile retailers' association AIMRA had also petitioned the CCI sometime back seeking immediate suspension of operations of Flipkart and Amazon as they alleged that the companies engaged in predatory pricing and were burning cash to offer heavy discounts on products.
These practices, in turn, are creating a grey market of mobile phones, causing losses to the exchequer "as players in the grey market evade taxes", they had said. The CCI is already looking into the practices of
e-commerce companies.
