Flipkart has been under the Enforcement Directorate’s scanner for the past two years for allegedly being in violation of Foreign Exchange Management Act (FEMA). The ED is now said to have completed their investigation and are reportedly looking at issuing a penalty in the tune of Rs 1,000 crore on the e-commerce giant, Economic Times reports.
Back in 2012, the then commerce and industry minister Anand Sharma alleged that Flipkart had violated the provisions of FEMA. The online retailer’s ‘WS Retail’ is said to have received investments from overseas companies, which is against the FDI norms of India. Under the current FDI policy, foreign companies are not allowed to invest in e-commerce. Though Flipkart changed its business model last year to allow sellers and buyers to deal independently on the e-commerce platform, ED could still slap in a fine for the year before.
As per FEMA norms, ED can slap a fine up to three times of the foreign investment. An Adjudicating Officer is currently “analyzing the case to take a finally call on the penalty amount,” which is believed to be around Rs 1,000 crore.