Rajasthan HC asks Centre to respond to charges of FDI violation by Amazon, Flipkart

In its hearing of the writ petition filed by the Confederation of All India Trader (CAIT), the Jodhpur bench of the Rajasthan High Court has directed the union government to inform the court whether ecommerce majors Amazon and Flipkart are violating foreign direct investment (FDI) policy within two weeks. 

The government was made a party to the case on October 1.  

The court had also asked Amazon and Flipkart to respond to the charge of violation of FDI policy flagged by CAIT in its petition. 

The court has also asked for a time-bound investigation by the Enforcement Directorate, which was probing the online platforms under the provisions of the Foreign Exchange Management Act (FEMA). The investigation was initiated in March in response to a separate case filed by the non-profit, Telecom Watchdog in the Delhi High Court, which alleged circumvention of FDI policy by Amazon and Flipkart.

Justice Dinesh Mehta, who was hearing the matter, has set November 11 as the next date of hearing. A separate petition filed by the Marwar Chamber of Commerce, Jodhpur was also admitted by the court and tagged to the hearing of the ongoing petition filed by CAIT.

Another trader body, All India Online Vendors Association (AIOVA), had also challenged the clean chit given by the Competition Commission of India to Flipkart at the National Company Law Appellate Tribunal (NCLAT) in May. AIOVA had alleged that Flipkart was misusing its dominant position in the market by creating seller entities which violated provisions of Press Note 3.

The commerce ministry had asked all online ecommerce platforms to submit a third party audited report on compliance with FDI norms laid down in Press Note 2 by September 30, which has been delayed.

Press Note 2 issued by the Department for Promotion of Industry and Internal Trade in December 2018 set the groundwork for the audit report.