Walmart-owned Flipkart and Amazon, both of which are experiencing rapid growth in India's Rs 70 billion e-commerce market, face rising regulatory scrutiny.
The government of India is planning to summon executives from Flipkart and Amazon as part of a deeper investigation into possible violations of foreign investment rules, reported news agency Reuters.
This step comes after recent raids on some sellers linked to the two e-commerce companies, according to a senior government source mentioned in the report. The action highlights the rising regulatory scrutiny faced by Walmart-owned Flipkart and Amazon, both of which are experiencing rapid growth in India’s Rs 70 billion e-commerce market. Previously, an antitrust investigation found both platforms to have breached rules by favouring specific sellers as per media reports.
According to Datum Intelligence, Flipkart held a 32% market share in India’s e-commerce market last year, while Amazon accounted for 24%. Together, these two giants dominate an industry that represents about 8% of India’s Rs 834 billion retail sector.
While Amazon and Flipkart have consistently asserted that they follow laws, the Enforcement Directorate has been examining allegations for several years that both companies, through select sellers, control inventory, which violates regulations.
These rules prevent foreign e-commerce firms from holding inventory, allowing them to operate only as a marketplace for sellers. Following last week’s raids on sellers associated with Amazon and Flipkart, the agency plans to summon executives from the companies and is currently assessing documents seized during the operation, according to a senior government source involved in the case.
The searches, which continued through Saturday, reportedly confirmed foreign investment law violations, according to the government source quoted in the report. The Directorate will now examine business records from the sellers and review their interactions with the e-commerce platforms over the last five years, the official added.
The recent raids were triggered by antitrust findings suggesting that both platforms maintained "end-to-end control over the inventory," with sellers acting as intermediaries, sources close to the matter revealed. At least two Amazon sellers and four Flipkart sellers were reportedly searched last week.
Source: India Today
