ED begins probe against e-com major Amazon

New Delhi: The Enforcement Directorate (ED) has initiated a probe against e-commerce giant Amazon for alleged violation of the foreign exchange law and rules of the country, official sources said on Thursday.

The probe is being conducted under various sections of the Foreign Exchange Management Act (FEMA) after the central probe agency recently received a communication from the Commerce Ministry seeking 'necessary action' against e-commerce players like Amazon and Flipkart pertaining to certain multi-brand retail businesses and an observation made by the Delhi High Court in relation to Amazon. The HC had said that said the attempt made by the US-based firm to control Future Retail through a conflation of agreements it has with an unlisted unit of the Indian company will be considered as violative of the FEMA and foreign direct investment (FDI) rules. When contacted, an Amazon spokesperson said it was "not aware of any new case by the ED against Amazon India".

Sources said the agency is looking to "investigate into the entire issue and will seek details from Amazon and other stakeholders". In the first instance under the ED scanner is a recent communication sent to it by the Department for Promotion of Industry and Internal Trade (DPIIT) that functions under the Commerce Ministry. It had forwarded a representation made by the Confederation of All India Traders (CAIT) alleging that major e-commerce players like Flipkart and Amazon violated FEMA and FDI rules.

CAIT had alleged that these e-commerce companies were in violation of FEMA and FDI rules by adopting illegal structuring/investments and practices. Flipkart, at that time, had said it was "fully compliant with all applicable laws and FDI regulations in the country". In the second instance being investigated by the ED that involves Amazon, the Delhi High Court had made observations on the US e-commerce firm objecting to the Rs 24,713 crore Future Group-Reliance deal that was signed in August last year.