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Deepti Sri · · 1 min readFlipkart and its founders threatened with $1.3b fine from Indian authority
“India’s financial crime agency has asked Walmart’s Flipkart and its founders to explain why they shouldn’t face a penalty of US$1.35 billion for alleged violation of foreign investment laws,” reported Reuters, citing three sources and an agency official.
Details:
- An official from India’s Enforcement Directorate (ED) reportedly said that the cases involved an investigation into allegations that Flipkart had attracted foreign investment and that a related party, WS Retail, then sold goods to consumers on its online platform, which was prohibited under the law.
- Flipkart received a “show cause notice,” which asks founders Sachin Bansal and Binny Bansal, as well as current investor Tiger Global, to explain why they should not face a fine of 100 billion rupees (over US$1.3 billion) for not complying with the country’s regulations, said the sources.
Dive deeper:
- Ecommerce giants like Flipkart and Amazon have faced intense scrutiny from ED for allegedly bypassing foreign investment laws that regulate multibrand retail and restrict such companies from operating a marketplace for sellers.
- Last month, Flipkart raised US$3.6 billion from Singapore’s GIC, SoftBank, Walmart, and others in its latest round of funding, taking its valuation to US$37.6 billion.
Editing by Collin Furtado and Arpit Nayak
(And yes, we’re serious about ethics and transparency. More information here.)
