November 7, 2024: The Enforcement Directorate (ED) on Thursday launched a major crackdown on vendors operating through e-commerce giants Amazon and Flipkart, conducting raids at 15 to 16 locations across multiple cities in India. The action is part of an ongoing investigation into possible violations of the Foreign Exchange Management Act (FEMA) and concerns over illicit financial activities involving some of these sellers.
The ED's searches targeted multiple locations in Delhi, Gurugram (Haryana), Hyderabad (Telangana), and Bengaluru (Karnataka), with sources revealing that the operation is linked to financial transactions conducted by "preferred" vendors on the two platforms.
This investigation comes after antitrust inquiries led by the Competition Commission of India (CCI) raised red flags about Amazon and Flipkart's business practices. The CCI found that the e-commerce giants had allegedly violated local competition laws by favoring specific sellers, prioritizing their product listings, and offering steep discounts that disadvantage other vendors. The CCI's findings suggested that these actions could harm competition and undermine the fair business environment for smaller sellers on the platforms.
According to official sources, the ED is now focusing on investigating the financial activities of certain e-commerce vendors who may have engaged in illegal or questionable financial practices, possibly linked to money laundering or other illicit financial transactions.
The raids mark a significant development in the ongoing scrutiny of the e-commerce sector in India, as regulators examine the operations of Amazon, Flipkart, and their associated sellers in light of growing concerns over market dominance, financial irregularities, and consumer protection.
As of now, the ED has not disclosed the identities of the vendors targeted or the specific nature of the illicit activities under investigation. However, officials have stated that the probe will continue, and further actions may follow depending on the evidence gathered during the raids.