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Amazon ( AMZN ), Flipkart face growing scrutiny in India

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Investigation progressing just as US-India near trade deal

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Indian agency has sought sales data from players like

Apple ( AAPL )

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Small traders say e-commerce companies hurt their business

By Aditya Kalra

NEW DELHI, April 29 (Reuters) - India's financial crime

agency has privately sought sales data and other documents from

smartphone players including Apple ( AAPL ) and Xiaomi ( XIACF ) as part of an

investigation into Amazon ( AMZN ) and Walmart ( WMT )-owned Flipkart, sources

familiar with the matter told Reuters.

The agency's queries come in the backdrop of India and the

United States nearing a trade deal. The protectionist e-commerce

regulations in India have been part of those discussions,

according to one Indian official, as U.S. authorities have long

called for opening up the sector.

India's Enforcement Directorate agency, which probes

economic crimes, has been investigating Amazon ( AMZN ) and Flipkart for

years for allegedly breaching laws by stocking and exerting

control over goods they list online. Indian laws prohibit

foreign e-commerce companies from doing so as the platforms can

only operate a marketplace to connect buyers and sellers.

India's small traders say such clandestine practices, along

with steep online discounts, have disrupted businesses at mobile

phone stores, but Amazon ( AMZN ) and Flipkart have maintained they

comply with all Indian laws.

The directorate wrote in recent weeks to smartphone

companies, including Apple ( AAPL ) and Xiaomi ( XIACF ), to get data related to

their online sales, according to three industry sources and one

senior Indian government official, who all declined to be named

as the investigation process is confidential.

One of the industry sources said the Enforcement Directorate

was looking at dealings between smartphone companies and Amazon ( AMZN )

and Flipkart, and had also sought any financial

contracts signed by the phone makers for online sales.

Apple ( AAPL ) received the agency's directive in March, said one of

the sources.

Apple ( AAPL ), Amazon ( AMZN ) and Flipkart did not immediately

respond to a request for comment. The Enforcement Directorate

also did not respond, while Xiaomi ( XIACF ) declined to

comment.

India's e-retail market is set to exceed $160 billion by

2028, up from $57-60 billion in 2023, consultancy firm Bain

estimates.

The government official said the smartphone companies had

been approached by the directorate only to seek information and

it was unlikely they will be accused in the case, although "the

investigation is going."

"Eventually if there's wrongdoing, there will be monetary

penalties (on e-commerce companies)," said the official.

Last year, a separate Indian antitrust investigation

concluded Amazon ( AMZN ) and Flipkart breached antitrust laws by giving

preference to select sellers on their platforms, and also

colluded with Samsung, Xiaomi ( XIACF ) and other smartphone companies to

exclusively launch products online.

The companies have not commented on the report and the

antitrust case is still ongoing.

Counterpoint Research data shows that Samsung and Xiaomi ( XIACF )

together held an almost 33% share of the Indian market in 2024,

with Apple ( AAPL ) at 7%. Around 40% of phone sales in India are online.

A Reuters investigation in 2021, based on internal Amazon ( AMZN )

papers, showed the company exerted significant control over the

inventory of some of the biggest sellers. The company denied

wrongdoing.