Business & Investment

Indian executives threaten founder Flipkart with a $ 1.35 billion fine-Source by Reuters

© Reuters. File Photo: Taken on July 30, 2021, this figure shows a small toy shopping cart in front of the flipkart logo displayed. REUTERS / Dado Ruvic / Illustration

By Aditya Kalra, Aftab Ahmed, Sanjeev Miglani

New Delhi (Reuters)-Indian financial criminal agency explains why Wal-Mart (NYSE :) Flipkart and its founders should not be fined $ 1.35 billion on suspicion of violating foreign investment law I asked. Officials told Reuters.

E-commerce giants Flipkart and Inc (NASDAQ) have said the executive office has evaded foreign investment laws that strictly regulate multi-brand retail and restrict such companies from operating markets for sellers. :) has been investigated for many years.

An executive agency official who refused to nominate alleged that Flipkart attracted foreign investment and that related party WS Retail sold goods to consumers on a shopping website prohibited by law. Said it was involved in the investigation.

The so-called “show cause notice” was issued in early July from an agency office in a city in southern Chennai to Flipkart, its founders Sachin Bansal and Vinnie Bansal, and current investor Tiger Global. And explained why you shouldn’t face fines. The revocation is Rs 100 billion ($ 1.35 billion), according to officials and sources familiar with the content of the notice.

A Flipkart spokeswoman said the company “complies with Indian laws and regulations.”

“We will work with the authorities as they consider this issue related to the 2009-2015 period in accordance with their notice,” the spokesman added.

Indian agencies do not publish such notices issued to the parties during the investigation.

One source said it would take about 90 days for Flipkart and others to respond to notifications. WS Retail closed at the end of 2015, he added.

Tiger Global declined to comment. Binny Bansal and Sachin Bansal did not immediately respond to the request for comment. The executive office also did not respond outside normal business hours.

Wal-Mart acquired a majority stake in Flipkart in 2018 for $ 16 billion. This is the biggest deal ever. Sachin Bansal sold his stake to Walmart at the time, but Binny Bansal held a small stake. Wal-Mart did not respond to requests for comment.

Flipkart’s valuation doubled to $ 37.6 billion in less than three years in the $ 3.6 billion funding round in July. Meanwhile, SoftBank Group reinvested in the company prior to its expected market debut.

This notice is the latest regulatory issue for online retailers who are already facing strict regulatory and antitrust investigations in India, and complaints from small sellers are increasing.

Indian retailers say Amazon and Flipkart support select sellers on their platforms, use complex business structures to circumvent foreign investment laws and hurt small players I am. Both companies deny cheating.

In February, Amazon’s documentary Reuters survey gave a small group of sellers years of incentives. I showed that. I used them to circumvent Indian law. Amazon says it doesn’t give preferential treatment to any seller.

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Indian executives threaten founder Flipkart with a $ 1.35 billion fine-Source by Reuters–sources-2579672 Indian executives threaten founder Flipkart with a $ 1.35 billion fine-Source by Reuters

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