E-commerce giants face summons amid regulatory crackdown

India's government plans to summon senior executives from Amazon and Flipkart as part of an intensified investigation into potential violations of foreign investment rules, as per media reports. This development follows recent raids conducted on sellers associated with the two e-commerce giants, a move highlighting increased regulatory scrutiny on these platforms, which are rapidly expanding in India's Rs 70 billion e-commerce market.

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Regulators have long been examining claims that Amazon and Walmart-owned Flipkart, through a network of preferred sellers, allegedly control inventory, a practice prohibited under India’s foreign direct investment (FDI) regulations. These rules stipulate that foreign e-commerce entities can only operate as digital marketplaces, not hold or influence inventory directly.

While both Amazon and Flipkart have consistently maintained compliance with Indian laws, the Enforcement Directorate (ED) has been investigating potential breaches for several years. The recent raids aimed at gathering evidence have led to document seizures, which are now under examination by officials. A government source indicated that the findings from the raids, which extended through last weekend, confirm violations of FDI norms.

Executives from both companies are expected to be summoned for questioning, and their interactions with associated sellers over the past five years will be closely reviewed. Amazon, Flipkart, and the ED have not immediately commented on the investigation or recent developments.