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ED starts probe against Flipkart for alleged FDI norms violation

ED officials reportedly confiscated certain important documents and computer hard drives

Bibhu Ranjan Mishra  |  Bangalore 

Officials of (ED) have started their investigation against e-retailer in connection with the alleged of foreign direct investment (FDI) regulations. A team of officials is understood to have visited to the e-commerce company’s office in Bangalore late last month.

While various reports say that they confiscated certain important documents and computer hard drives, this however could not be ascertained.

In reply to a query, a spokesperson of said in an email reply, “We are in complete compliance with the laws of the land and we are working with authorities to address the same.”

Apart from Flipkart, the other e-retailers who have come under the ED's scanner include Snapdeal, Jabong, Yebhi, Myntra and Fashionandyou for receiving funding from foreign investors even though FDI was banned in multi-brand retail, according to reports.

“The latest Consolidated FDI Policy issued by the Government of India on April 10, 2012 while laying down the policy with regard to trading activities under sub-clause clearly provides that e-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform,” said Salman Waris, Partner and Head of Technology Practice at a Delhi-based law firm.

“Such companies would engage only in business-to-business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well,” he added.

Flipkart’s global investors include Accel Partners, Tiger Global, Naspers and Iconiq Capital. In August this year, the Bangalore-based company had raised $150 million in its fourth round of funding from MIH (part of Naspers Group) and ICONIQ Capital.

First Published: Tue, December 11 2012. 21:59 IST