Traders’ body says Commerce Ministry has flagged violations by Amazon, Flipkart

CAIT says its complaints regarding violation of FDI policy and FEMA rules by e-commerce giants have been forwarded by DPIIT to ED, RBI.

The Commerce Ministry has forwarded representations of alleged violations by Amazon and Flipkart to the Enforcement Directorate and the Reserve Bank for “necessary action”, according to traders’ grouping CAIT. The Confederation of All India Traders (CAIT) had alleged that the e-commerce players violated FEMA and FDI rules.

The complaints pertain to alleged violation of the Foreign Direct Investment (FDI) policy in the deal between Flipkart and Aditya Birla Fashion and Retail; alleged misuse of FDI policy in manufacturing for multi-brand retailing of grocery by leading e-commerce players.

Besides, the complaints are regarding alleged violation of the Foreign Exchange Management Act, 1999, (FEMA) by Amazon; “blatant violation” of FDI policy and FEMA rules and exploitation of loopholes by Amazon and Walmart.

“The Enforcement Directorate and Reserve Bank of India are hereby requested to take necessary action,” said the Department for Promotion of Industry and Internal Trade (DPIIT) in a letter dated December 22 shared by CAIT.

DPIIT forwarded the representations to the two agencies saying CAIT has alleged that e-commerce companies are in violation of FEMA and FDI rules by adopting illegal structuring/investments and practices.

DPIIT comes under the administrative control of the Commerce Ministry.

Responding to an e-mail seeking comments on this development, a Flipkart spokesperson said:”The Flipkart group is fully compliant with all applicable laws and FDI regulations in the country. We’re proud that as a homegrown marketplace, we enable lakhs of sellers, MSMEs, kiranas and artisans to connect with consumers across the country, helping them grow, accelerate their businesses and making them prosperous”.

The B2B operations of Walmart in India are owned by Flipkart. E-mails sent to Aditya Birla Fashion and Retail Ltd and Amazon India did not elicit a response.

CAIT Secretary General Praveen Khandelwal said the grouping had made complaints about Amazon and Walmart-owned Flipkart to Commerce Minister Piyush Goyal in the recent past.

Based on the complaints, “.. the DPIIT of the Ministry of Commerce in its letter no. 5/2/2019-e-Commerce (Part-I) issued on 22 December, 2012 has asked both ED and RBI to take necessary action against Amazon & Flipkart”.

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