ED issues Rs 10,000 crore show-cause notice to Flipkart under FEMA Act

Alleged violation of rules relating to foreign investment

The case relates to Flipkart and its other holding companies that received investments from foreign companies between 2009 and 2015.

New Delhi: The ED has issued show-cause notices worth Rs 10,600 crore under FEMA against Flipkart India, a Singapore-registered company and eight other individuals and units. This is the largest notice ever issued by ED under FEMA.

The Central Bureau of Investigation (CBI) has taken action against these entities following an order issued by a competent authority under the Foreign Exchange Management Act (FEMA) in July. The case relates to Flipkart and its other holding companies that received investments from foreign companies between 2009 and 2015. Flipkart has been found to be violating various provisions of foreign exchange.

Sources said one of the provisions relates to the transfer and issuance of securities to a person outside India. Walmart bought Flipkart in 2018 for 16 billion. A Flipkart spokesperson said the company fully complies with Indian laws and foreign direct rules. "We will extend full cooperation to the authorities investigating the matter," he said.

An official with knowledge of the incident said FEMA's show-cause notice was issued after an ongoing investigation under various sections of the Foreign Exchange Act was completed. According to him, the legal hearing has begun. The units to which reasoned notice has been sent will be called for a personal hearing. Under current FDI rules, FDI is not allowed in multi-brand retail.