Delhi HC Orders ED Probe Against E Commerce Giants

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New Delhi: The Delhi High Court ordered the Enforcement Directorate to identify whether the e-commerce companies such as Snapdeal, Jabong, Myntra and Amazon-owned Junglee have contravened the country’s foreign direct investment (FDI) rules.

The court was hearing a case filed against the government by shoe shop owners on the grounds that India bars overseas capital in the sector and that such investments were also in breach of the Foreign Exchange Management Act.

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“The court has ordered investigation of 21 companies and asked the government of India to file a report and counter affidavit” by December 21, said Rishi Agrawala, counsel for the All India Footwear Manufacturers & Retailers Association that had petitioned the court in August.

Companies such as Snapdeal, Flipkart and Amazon India say they operate marketplaces, where vendors sell to customers, rather than retailing directly to buyers. Amazon has consistently said that it operates within the law in all the markets it’s present in.

Jabong said it couldn’t remark on specifics as it didn’t have a copy of the petition. Interim CEO Nils Chrestin also said Jabong hadn’t violated any aspect of the FDI policy and wasn’t under investigation by the ED. Responses were still awaited from other companies mentioned in the petition as of press time.

A Snapdeal spokesperson said it delivers a technology platform that connects sellers to their buyers and that its activities are in compliance with the laws of the land.

Over the past few years, brick-and mortar retailers have raised their pitch against e-commerce companies and demanded a level-playing field from the government. They have said that e-commerce rivals are luring consumers with heavy discounts funded by overseas investments.

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