India’s financial crime watchdog looks to fine e-commerce giant Flipkart $1.3bn
India’s financial crime watchdog is looking to fine Walmart-backed e-commerce giant Flipkart $1.35bn over claimed foreign investment violations, according to reports.
The Enforcement Directorate agency has been investigating retail heavyweights like Flipkart and Amazon for allegedly bypassing laws that regulate multi-brand retail and restrict them to operating a marketplace for sellers, Reuters first reported citing sources familiar with the matter.
However, the fine was sparked by claims that Flipkart pulled in foreign investment and a ‘related party’ known as WS Retail then sold goods on its website – which is prohibited under Indian law.
Flipkart, which rallied a near $40bn valuation in mid-July, was reportedly issued a “show cause notice” in July, inviting it to explain why it did not need to need to pay the fine within around 90 days.
Morning Wire has contacted Flipkart for comment.
It comes as the e-commerce giant ups its warehouse network in the coastal state of Gujarat, to meet the increasing demand for the e-commerce sphere in India.
Gujarat government chief minister, Shri Vijay Rupani, explained that the digital marketplace has allowed sellers from rural areas of India to source an income.
“E-commerce has played a pivotal role in taking the local seller ecosystem to a pan-India customer base,” he said, adding that it will “create thousands of direct and indirect job opportunities” for SMEs, local traders and artisans.