ED Rs 10,600 Cr FEMA Contravention Against FlipKart
- ByAyushi Ray | August 5, 2021
ED Rs 10,600 Cr FEMA contravention against FlipKart for their alleged violation of the foreign exchange law. They said the notice under various sections of the Foreign Exchange Management Act (FEMA) was issued to at least 10 people last month that includes Flipkart, along with its founders Sachin Bansal and Binny Bansal, among others. Sources said the notice was issued after proper investigation and the charges include violation of the foreign direct investment (FDI) rules and those that regulate multi-brand retail. They said that this Walmart-owned company and its executives will now undergo adjudication that will be conducted by a Special Director-rank officer of the agency based in Chennai. Although proceedings under the FEMA are civil in nature, if found guilty, final penalty, post adjudication, can be at least three times the initial amount contravened under the law.
“Flipkart is in compliance with Indian laws and regulations, including FDI regulations. We will cooperate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice,” a spokesperson for the ecommerce major said. The case of alleged FDI rules violation against Flipkart has been under the ED scanner since 2012 and the agency, according to official sources, has found alleged violations of the FEMA under various counts, including an instance of transfer and issue of security to a person or entity outside India. Flipkart, which competes with Amazon and Reliance JioMart in the Indian e-commerce space, has seen significant growth in the e-commerce sector, over the past many years. In 2018, US-based retail giant Walmart Inc had picked 77 percent stake in Flipkart for $ 16 billion. Its founders and many of its investors took either a partial or complete exit at that time.
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