Enforcement Directorate of India Investigates E-Commerce Practices
The financial crime agency of India has requested confidential sales data and contract details from smartphone makers, including Apple and Xiaomi, as part of an ongoing investigation into Amazon and Flipkart. According to sources familiar with the matter, this move forms part of a broader effort to scrutinise potential violations of Indian e-commerce laws.
The Enforcement Directorate (ED), which probes economic offences, is investigating whether Amazon and Walmart-owned Flipkart have breached regulations by exerting control over inventory sold through their platforms. Under Indian law, foreign e-commerce firms can only operate as marketplaces, serving as intermediaries between sellers and buyers, rather than directly managing goods.
Smartphone Firms Asked for Sales Contracts
The ED has recently contacted major smartphone manufacturers, including Apple and Xiaomi, to request data on online sales and any financial agreements made with Amazon and Flipkart. One source confirmed Apple received the notice in March. Xiaomi declined to comment, while Apple, Amazon, and Flipkart did not immediately respond to requests for comment.
One industry source stated the agency is investigating whether smartphone companies had exclusive arrangements with the e-commerce giants, potentially breaching marketplace rules. The request for data appears to be limited to information gathering at this stage, with no accusations against the smartphone companies themselves.
Trade Tensions and Regulatory Scrutiny in India
This development comes as India and the US move closer to finalising a trade agreement, with India’s e-commerce rules reportedly under discussion. US authorities have long urged India to relax its strict foreign investment and operational rules in the online retail space.
India’s small traders have accused Amazon and Flipkart of undercutting them with steep discounts and allegedly manipulating the market. Both companies insist they operate within the boundaries of Indian law.
The government official involved in the matter said that if violations are found, financial penalties against the e-commerce firms could follow. A previous antitrust investigation concluded that Amazon and Flipkart favoured select sellers and colluded with brands like Samsung and Xiaomi to offer exclusive online launches. That case remains under review.
E-Commerce Boom and Market Impact
India’s e-retail market is projected to grow significantly—from around $60 billion in 2023 to over $160 billion by 2028, according to consultancy firm Bain. Currently, online platforms account for roughly 40% of smartphone sales in the country. In 2024, Samsung and Xiaomi together held 33% of the Indian smartphone market, while Apple controlled 7%, based on data from Counterpoint Research.
A previous Reuters report from 2021, citing internal documents, claimed Amazon held extensive control over some major sellers’ inventories. Amazon denied any wrongdoing at the time.
As India’s digital marketplace grows, government oversight is expected to intensify, ensuring compliance and protecting smaller retailers from being edged out by dominant global players.
with inputs from Reuters
