ED sends notice to Flipkart, its founders for alleged violation of foreign exchange law
The Directorate of Enforcement has issued opinions to Flipkart e-commerce platform, its founders and nine others for alleged violation of the foreign exchange law, Reuters reported Thursday.
The notices, reportedly published in early July, asked Flipkart founders Sachin Bansal and Binny Bansal, as well as an investor Tiger Global, to explain why they should not be fined Rs 10,600 crore. .
The Law Enforcement Directorate alleged that Flipkart attracted foreign investment and that a related party, WS Retail, then sold goods to consumers on its shopping website, which was prohibited by law. .
An official told NDTV that Flipkart violated the Foreign Exchange Management Law while attracting foreign investment between 2009 and 2015. The company was asked to respond to reviews within 90 days.
In a statement, Flipkart denied any illegality on its part. “Flipkart complies with Indian laws and regulations, including foreign direct investment regulations,” the company said. “We will cooperate with the authorities as they consider this issue relating to the period 2009-15 in accordance with their advice.”
The Law Enforcement Department has been investigating Flipkart and global e-commerce giant Amazon for years for allegedly circumventing foreign investment laws that regulate multi-brand retailing, Reuters reported.
In August 2018, Walmart completed the acquisition of a controlling 77% stake in Flipkart. The deal, valued at $ 16 billion, was the largest of its kind in the world. the Competition Commission of India approved the deal despite protests from traders across the country who feared the deal could bankrupt several small retailers.
Last month, Flipkart announced that it had raised $ 3.6 billion (roughly Rs.26,805.6 crore) through investments from GIC, the Canada Pension Plan Investment Board, SoftBank Vision Fund 2 and Walmart. With this, the valuation of the e-commerce giant jumped to $ 37.6 billion.