Forex violation case: ED sends Rs 10,600 crore FEMA violation notice against Flipkart, its founders
Official sources said on Thursday that the Enforcement Directorate (ED) has issued show-cause notices to e-commerce major Flipkart and its promoters for alleged violation of foreign exchange law for about Rs 10,600 crore.
He said notices were issued to 10 people last month, including Flipkart, its founders Sachin Bansal and Binny Bansal, under various sections of the Foreign Exchange Management Act (FEMA).
Sources said the notice was issued after the completion of the probe and the allegations include violation of foreign direct investment (FDI) rules and regulation of multi-brand retail.
He said the Walmart-owned company and its executives will now go through the decision which will be conducted by a special director-rank officer of the Chennai-based agency.
Proceedings under FEMA are civil in nature and the final penalty, after adjudication, may be at least three times the amount contravened under the law. Flipkart said that it is cooperating with the ED in this investigation.
A spokesperson for the e-commerce major said, “Flipkart is in compliance with Indian laws and regulations, including FDI rules. We will cooperate with the authorities as they look into the issue relating to the period 2009-2015 as per their notice.” Said.
However, Sachin Bansal and Binny Bansal could not be immediately contacted.
The alleged FDI norms violations against Flipkart have been under the ED’s scrutiny since 2012 and the agency has found alleged violations of FEMA in various cases, including those of an individual or entity outside India, according to official sources.
Flipkart, which competes with companies including Amazon and Reliance JioMart in the Indian e-commerce space, has seen significant growth over the past several years.
In 2018, US-based retail giant Walmart Inc bought a 77 per cent stake in Flipkart for USD 16 billion. Its founders and many of its investors exited either partially or wholly at the time.
Last month, Flipkart Group announced a USD 3.6 billion (about Rs 26,805.6 crore) raise led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, valued at the e-commerce giant. The company is worth USD 37.6 billion. .
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