Thursday 28 July 2016

ED Begins Probe Against a Dozen Online E-Retail Firms

New Delhi

The Enforcement Directorate has begun a comprehensive probe against a dozen popular online retail firms in the country for alleged violations of foreign direct investment rules in their e-commerce businesses.

The agency, according to sources, has received a communication from the country's banking regulator-- the Reserve Bank of India regarding a few firms while it has took up the rest cases suo-moto for probe under the provisions of the Foreign Exchange Management Act (FEMA).

A special team of officials of the central probe agency, sources said, is working to study the business operations of these firms which have thronged the online retail marketplace in the last few years.

The sources declined to reveal the identity of the companies under the scanner as the investigations are at a preliminary stage.

According to an official note accessed by PTI, close to a dozen firms are under the scanner of the agency.

There are allegations that the companies have violated the foreign direct investment (FDI) norms of e-commerce sector. 

As per the current policy, FDI is not allowed in domestic e-commerce companies conducting B2C (business-to-consumer) transactions while 100 per cent foreign investment is permitted in B2B (business-to-business).

A slew of fund raising and foray of foreign-based investors in these domestic companies has also prompted the enforcement wing of the Finance Ministry to look into their operations in this first time exercise the agency has initiated against online retail and trade companies operating in India, sources said.

The agency, sources added, has gathered documents about the business incorporations, shareholders and business market models of these firms, which include big capital and small online retail firms which are based in major metropolis of the country.

The probe period for investigating the FDI contributions of these firms under the scanner is before April 2013.

Under FEMA rules, a firm or entity found in contravention of the law can be penalised with a penalty three times of the detected violation.

The probe is expected to finish in a "reasonable time period" and in few cases the ED could issue final show cause notices soon.

PLACES: New Delhi
SECTION: Business
OUTLOOK 31 August, 2014
© Copyright PTI. All rights reserved. Republication or redistribution of any PTI content, including by framing or similar means, is expressly prohibited without their prior written consent.
Download the Outlook ​Magazines App. Six magazines, wherever you go! Play Store and App Store

Post a Comment

You are not logged in, please Log in or Register
  • Daily Mail
Kashmir has been the scene for massive protests following the killing of Hizbul commander Burhan Wani on July 8. “Non-lethal” pellet guns used against the protesters have blinded many and 45-odd people have died in the face-off against security forces. The scale of protests have led to frayed tempers in the mainland with many resorting to high-voltage jingoism. But how well do you know Kashmir? Find out, take this quiz.
QUIZ STARTED ON: Jul 25, 2016