No RBI, ED probe launched into alleged FDI violation in Flipkart-Aditya Birla Fashion deal: MoS Commerce

The Reserve Bank of India (RBI) and Enforcement Directorate (ED) are yet to launch an investigation into the alleged FDI policy violation in the recent Rs 1,500-crore deal between Flipkart and Aditya Birla Fashion & Retail (ABFRL). Mira Sethi, Deputy Director at the Department for Promotion of Industry and Internal Trade (DPIIT) in a letter to RBI and ED on December 22, 2020, had “requested to take necessary action” following allegations leveled by the trader’s body Confederation of All India Traders (CAIT) “wherein it has been, inter-alia, alleged that e-commerce companies are in violation of Fema rules/FDI policy by adopting the illegal structuring/investments and practices.”

However, “no such investigation has been initiated by RBI or Enforcement Directorate on the matter,” MoS Commerce and Industry Som Parkash said in a written reply to a question in the Rajya Sabha on Friday. The DPIIT letter had noted CAIT’s allegations with respect to “FDI policy in manufacturing is being misused for multi-brand retailing of grocery by leading e-commerce players”, “complaint against Amazon for various violations of the Foreign Exchange Management Act, 1999 and rules and regulations framed thereunder” and “blatant violation of FDI policy/FEMA rules, and exploitation of the loopholes by multinational retailing giants, Amazon and Flipkart” apart from objections on the Flipkart Investments-Aditya Birla Fashion and Retail deal.