The Commerce Ministry has requested the Enforcement Directorate and RBI to examine whether e-commerce majors Flipkart, Amazon and Snapdeal violated FDI rules by engaging in business-to-consumers (B2C) activity.
The move followed a complaint filed by traders’ body CAIT which alleged that the e-commerce portals circumvented law and engaged in B2C activity as 100 per cent FDI is allowed in the business-to-business (B2B) segment.
“It's requested that the matter may be examined and appropriate action may be taken,” said a letter by the Ministry addressed to ED and RBI.
In its complaint, CAIT stated that Amazon, Flipkart and Snapdeal, which recently conducted mega sales, solicited the general public through big advertisement campaign in print, electronic and social media.
“Since they have received foreign investment, they are allowed to undertake B2B e-commerce activity and not B2C. The said advertisements addressed to the public in general tantamount to retail trading,” CAIT said in a letter to the Department of Industrial Policy and Promotion (DIPP) Secretary Amitabh Kant.
Sources in ED said such cases are already under probe. A Snapdeal spokesperson said: “Snapdeal is a technology platform that connects sellers with buyers to facilitate transactions. As a pure market place, we serve a rapidly expanding base of sellers, who find value in connecting with a large universe of buyers.”
However, there was no response from Amazon and Flipkart.