The Enforcement Directorate has told the Delhi High Court that it was investigating whether e-commerce companies Amazon and Flipkart violated foreign exchange provisions, PTI reported on Thursday. The court had in July issued notices to the agency, the Centre, and the two companies after a public interest litigation accused them of violating foreign direct investment rules.
The court is scheduled to hear the matter on November 19.
Non-governmental organisation Telecom Watchdog had filed the plea in July, seeking legal proceedings against Amazon and Flipkart, claiming that they had created multiple entities to circumvent norms. The plea had claimed that Amazon and Flipkart buy branded goods in bulk at discounts from manufacturers, rendering small businesses uncompetitive by a wide margin.
“As a consequence of this FDI norms violation, smaller sellers are unable to participate in the fast growing e-commerce sector,” the plea said.
In the response, the Enforcement Directorate said it has “already registered and initiated investigation under the provisions of Foreign Exchange Management Act against the two companies to ascertain whether they have been contravening any provisions of FEMA or contravening any rule, regulations, notification, direction or order issued in exercise of the powers under FEMA”. The agency also sought that the plea be dismissed.
“In marketplace activities, margins are slim, but if an entity stocks such hot-selling goods, it can make much bigger margins. This is the point of concern,” the petition had said, according to The Print.