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ED slaps ₹10,600-cr FEMA contravention notice against Flipkart

A file photo of the Flipkart logo   | Photo Credit: REUTERS

The Enforcement Directorate (ED) has sent a show-cause notice to Flipkart and others for alleged violations under the Foreign Exchange Management Act (FEMA) involving about ₹10,600 crore.

“The notice was sent last month,” confirmed a senior ED official. The allegations pertain to suspected violation of the Foreign Direct Investment (FDI) related regulations. The company and the persons concerned have been asked to respond to the notice within 90 days.

Flipkart, in a statement, said: “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.”

Any violation under the FEMA is considered a civil offence and, if proven, attracts penalty.

Cooperating with authorities: spokesperson

Flipkart said it was cooperating with the ED in this investigation.

"Flipkart is in compliance with Indian laws and regulations, including FDI regulations. We will co-operate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice," a spokesperson for the e-commerce major said.

However, Sachin Bansal and Binny Bansal could not be contacted immediately.

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 companies, including Amazon and Reliance JioMart in the Indian e-commerce space, has seen significant growth over the past many years.

In 2018, US-based retail giant Walmart Inc had picked 77 per cent stake in Flipkart for USD 16 billion. Its founders and many of its investors took either a partial or complete exit at that time.

Last month, Flipkart Group had announced raising USD 3.6 billion (about ₹26,805.6 crore) in funding led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, valuing the e-commerce giant at USD 37.6 billion.

(With inputs from PTI)


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Printable version | Sep 29, 2021 8:45:32 AM | https://www.thehindu.com/business/ed-slaps-10600-cr-fema-contravention-notice-against-flipkart/article35738548.ece

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