The Enforcement Directorate (ED) has offered to close the Foreign Exchange Management Act (FEMA) violations related probe against e-commerce major Flipkart, under certain conditions, PTI reported citing sources.
The agency has told Flipkart that the case could be concluded, if it admits wrongdoing and pays a penalty. “ED has given the option of compounding to Flipkart. ED has asked Flipkart to admit its mistake, pay a penalty and dismantle the seller network associated with it,” a source told PTI.
Flipkart did not respond to queries, the report added.
Notably, the ED is also investigating Amazon India for similar allegations related to discounts and competition law violations. When contacted, an Amazon India spokesperson said, “We do not comment on ongoing investigations.”
What are compounding rules?
The compounding rules allow companies to voluntarily admit breach of the provision under the FEMA and settle the case by paying a penalty for the contraventions without undergoing lengthy enforcement actions.
Flipkart and Amazon India have been under ED scrutiny for alleged breach of FEMA provisions.
CCI probing Flipkart for similar violations
The Competition Commission of India (CCI) is also conducting an investigation against Flipkart regarding alleged competition law violations by certain subsidiaries of Flipkart in India and other parties.
In September 2024, a non-confidential version of the CCI DG’s Investigation Report was received by one of the Flipkart subsidiaries that alleged certain competition law violations.
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