‘Admit mistake, pay penalty’: ED offers to close FEMA violation case against Flipkart on conditions — What we know

The Enforcement Directorate (ED) has offered to close the investigation into Foreign Exchange Management Act (FEMA) violations against e-commerce giant Flipkart under certain conditions, PTI reported citing sources.

The agency told Flipkart that the case could be concluded if it admitted the crime and paid the penalty. “ED has given Flipkart the option to consolidate. ED has asked Flipkart to accept its mistake, pay a penalty and disband the seller network associated with it,” a source told PTI.

The report stated that Flipkart did not respond to questions.

Notably, the ED is also investigating Amazon India over similar allegations regarding discounts and competition law violations. When contacted, an Amazon India spokesperson said, “We do not comment on ongoing investigations.”

What are the rules of compounding?

Aggregation rules allow companies to voluntarily admit to a violation of the provision under FEMA and resolve the case by paying penalties for the violations without the need for lengthy enforcement proceedings.

Flipkart and Amazon India are under ED scrutiny for alleged violation of FEMA provisions.

CCI is investigating Flipkart for similar violations

The Competition Commission of India (CCI) is conducting an investigation against Flipkart regarding alleged competition law violations by some of Flipkart’s subsidiaries and other parties in India.

In September 2024, a non-confidential version of the CCI DG’s Investigation Report was received by one of Flipkart’s subsidiaries, alleging certain competition law violations.