Flipkart is under investigation by ED for alleged violation of FEMA provisions. , Photo courtesy: Reuters
The Enforcement Directorate (ED) is believed to have offered the option to close the FEMA violation case against e-commerce major Flipkart if the Walmart group company admits its mistake and pays the fine, sources close to the development said.
Last week, the Enforcement Directorate had given the option to Flipkart under the compounding rules of FEMA (Foreign Exchange Management Act).
A source said, “ED has given the option of compounding to Flipkart. ED has asked Flipkart to accept its mistake, pay the fine and dismantle the seller network associated with it.” PTI,
An email query sent to Flipkart did not elicit any response.
ED had also summoned Amazon India to investigate the condition of the company. When contacted, an Amazon India spokesperson said, “We do not comment on ongoing investigations.
No response was received to the questions sent to ED in this matter. However, ED sources said that they have not made any proposal to Flipkart regarding compounding.
An official of one of the e-commerce firms, speaking on condition of anonymity, said the compounding option given by the ED is to strengthen India’s negotiating power during the ongoing bilateral trade talks with the US.
Compounding rules allow companies to voluntarily admit violation of a provision under FEMA and settle the case by paying penalty for the violation without lengthy enforcement action.
Flipkart and Amazon India are under investigation by ED for alleged violations of FEMA provisions.
There have been allegations that these companies are insisting on discounts on their platforms to increase sales.
The ED had first issued show cause notices to Flipkart, related firms and individuals in July 2021, seeking their reply as to why further proceedings should not be initiated against them under India’s Foreign Direct Investment Rules and Regulations on the basis of alleged violations during the period 2009 to 2015.
The notice pertained to the period between 2009 and 2015, before the majority stake in Flipkart was acquired by US major Walmart.
Walmart had acquired a majority stake in Flipkart in 2018.
Even after the acquisition by Walmart, ED has given notice to Flipkart to investigate its business after 2016. The most recent notice was sent to the company in April this year.
The Competition Commission of India is also investigating Flipkart in relation to alleged competition law violations by some of its subsidiaries and other parties in India.
In September 2024, a subsidiary of Flipkart received a non-confidential version of the CCI DG’s investigation report, which alleged certain competition law violations.
published – October 12, 2025 05:57 PM IST
