Three sources and an agency official told Reuters that India’s financial crime agency has asked Walmart’s Flipkart and its founders to explain why they should not face US$1.5 billion (approximately Rs 10,010 crore) for allegedly violating foreign investment laws. ) Fine.

The Bureau of Enforcement has been investigating e-commerce giants Flipkart and Amazon for years for allegedly bypassing foreign investment laws that strictly regulate multi-brand retail and restrict such companies from operating seller markets.

The enforcement official, who asked not to be named, said that the case involved investigations into Flipkart’s allegations that Flipkart attracted foreign investment and related parties, WS Retail, and then sold goods to consumers on its shopping website, which is prohibited by law.

The agency’s office in the southern city of Chennai issued a so-called “performance reason notice” to Flipkart, its founders Sachin Bansal and Binny Bansal, and current investor Tiger Global in early July to explain why they should not face a fine of rupee. Officials of the agency and sources familiar with the notice said that negligence caused losses of 10,000 crore rupees.

A Flipkart spokesperson stated that the company “complied with Indian laws and regulations.”

The spokesperson added: “We will with the authorities because they look at issues related to the period 2009-2015 based on their notice.”

Indian institutions will not disclose such notices to all parties during the investigation.

One of the sources said that Flipkart and other companies have about 90 days to respond to the notice. The person added that WS Retail ceased operations at the end of 2015.

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Tiger Global declined to comment. Binny Bansal and Sachin Bansal did not immediately respond to requests for comment. The Enforcement Bureau also did not respond outside normal working hours.

Walmart acquired a majority stake in Flipkart for US$16 billion (approximately Rs 11872 crore) in 2018, the largest transaction ever. At that time, Sachin Bansal sold his shares to Wal-Mart, and Binny Bansal retained a small portion of the shares. Wal-Mart did not respond to a request for comment.

Flipkart’s valuation has doubled in less than years, reaching 37.6 billion US dollars (approximately 279.98 billion rupees). In July, it raised 3.6 billion US dollars (approximately 2671 billion rupees) in financing. During this period , SoftBank Group reinvested in the company before it was expected to go public.

The notice is the latest regulatory challenge facing the online retailer. The company is already facing stricter and antitrust investigations in India, as well as an increasing number of complaints from small sellers.

Brick-and-mortar retailers in India stated that Amazon and Flipkart favor selected sellers on their platforms and use complex business to bypass foreign investment laws, hurting smaller participants. These companies denied any wrongdoing.

In February of this year, a survey conducted by Reuters based on Amazon documents showed that it had been offering preferential treatment to a small group of sellers for many years, publicly misrepresenting its relationship with them, and using them to bypass Indian laws. Amazon said it does not any sellers preferential treatment.

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