File photo used for representative purpose only
| Photo Credit: Reuters

The Enforcement Directorate on Thursday (November 7, 2024) conducted searches against some sellers who do business on e-commerce giants like Amazon, Flipkart as part of a Foreign Exchange Management Act (FEMA) investigation, official sources said.

Multiple locations in Delhi, Gurugram (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) are being searched, the sources said.

They said the action is related to the financial transactions being done by some of the “preferred” vendors and sellers who do business through Amazon and Flipkart like e-commerce platforms.

The probe is being conducted under the FEMA, they said.

The searches by the ED came weeks after Reuters reported India’s antitrust body had found the two companies and their sellers violated competition laws by giving preference to select sellers on their platforms. Both companies have maintained they comply with Indian laws.

Amazon and Flipkart have for years faced allegations from Indian brick-and-mortar retailers that they violate foreign investment rules by working with select preferred sellers.

A Reuters investigation in 2021, based on internal Amazon papers, showed the company exerted significant control over the inventory of some of the biggest sellers on Amazon.in.

Indian laws prohibit foreign e-commerce players from holding inventory of products and permits them only to operate a marketplace where sellers can offer products.