NEW DELHI: The Enforcement Directorate (ED) has issued a show-cause notice of about Rs 10,600 crore to e-commerce major Flipkart and its promoters for alleged violation of foreign exchange law.
According to senior officials, the notice was issued to 10 people last month under various sections of the Foreign Exchange Management Act (FEMA), including Flipkart, its founders Sachin Bansal and Binny Bansal, among others.
According to sources, the notice was issued following the completion of the investigation, and the charges include violations of foreign direct investment (FDI) rules as well as those that govern multi-brand retail.
They stated that the Walmart-owned company and its executives will now be adjudicated by a Special Director-rank officer of the agency based in Chennai.
The FEMA proceedings are civil in nature, and the final penalty, after adjudication, can be at least three times the amount violated by the law.
Flipkart stated that it was working with the ED on this investigation.
“Flipkart is in compliance with Indian laws and regulations, including FDI regulations. We will co-operate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice,” a spokesperson for the e-commerce major said.
The case of alleged FDI rules violation against Flipkart has been under the ED’s scrutiny since 2012, and the agency, according to official sources, has discovered alleged FEMA violations under various counts, including an instance of security transfer and issue to a person or entity outside India.
Flipkart, which competes in the Indian e-commerce space with companies such as Amazon and Reliance JioMart, has seen significant growth in recent years.
Walmart Inc, based in the United States, purchased a 77% stake in Flipkart for USD 16 billion in 2018. At the time, its founders and many of its investors either took a partial or complete exit.
Flipkart Group announced last month that it had raised USD 3.6 billion (approximately Rs 26,805.6 crore) in funding led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, valuing the e-commerce behemoth at USD 37.6 billion.