The ED raided the offices of many sellers selling goods on Amazon-Flipkart. The sellers were accused of violating foreign investment rules. The ED raided the offices of many sellers in Delhi, Mumbai, Bengaluru and Hyderabad. The action was taken against sellers selling goods on e-commerce platforms following a decision by antitrust body CCI, which flagged the possibility of irregularities in their foreign investments. CCI has issued notices to e-commerce companies many times in this regard.
Alleged violation of PMLA
According to Reuters, the ED raided the offices of many sellers selling goods on the two leading e-commerce platforms. They were accused of violating foreign exchange rules. The CCI has issued warnings to these sellers on this matter several times. Now, the Enforcement Directorate (ED) has started investigating the case regarding violation of PMLA, or money laundering rules.
According to the report, ED officials said that sellers selling goods on e-commerce platforms such as Amazon and Flipkart may violate foreign exchange rules. ED will investigate how the prices of products sold on e-commerce platforms are indirectly affected? How these companies prioritize certain sellers on their platforms, thereby lowering product prices.
Raid 19 locations
CCI has previously issued preferential notices to these e-commerce companies, saying that this move is not conducive to fair competition. The ED has reportedly raided 19 locations in the country. However, the names of these locations have not yet been revealed. The two e-commerce companies have yet to issue any statement. Both e-commerce platforms have grown rapidly over the past few years. Both companies have contributed significantly to India’s growing e-commerce industry.
The report stated that ED has been reviewing the business modules of the two companies over the past few years. Under Indian law, e-commerce platforms are supposed to act as neutral marketplaces and cannot directly control product inventory. ED is investigating violations of FDI rules from this angle.
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