India Opens Multiple Investigations Into Amazon, Flipkart, Swiggy Over Compliance Issues
Indian regulators are investigating Amazon, Flipkart, and Swiggy for possible breaches of investment rules, competition laws, and product standards.
Indian regulators are investigating Amazon, Flipkart, Myntra, Swiggy, Zomato, Xiaomi, and other foreign-backed firms for suspected violations of investment laws, antitrust rules, and product standards. Multiple agencies, including the Enforcement Directorate, Competition Commission, and consumer protection bodies, have launched separate cases spanning e-commerce, smartphone sales, and fast-delivery services.
Regulators are focusing on specific legal breaches: foreign investment caps allegedly bypassed through controlled sellers, exclusive partnerships that sideline competitors, and non-compliant products shipped to Indian consumers. Each investigation is based on documented transactions, internal business arrangements, or product inspections—highlighting how companies have structured operations in ways that may conflict with Indian law.
Myntra Faces Action Over Direct-to-Consumer Sales
On July 23, 2025, India’s financial crime investigation agency opened a case against Myntra, Walmart’s online fashion subsidiary, for allegedly bypassing restrictions on foreign-funded wholesale firms. Indian rules prohibit such companies from selling directly to retail consumers.
Investigators are reviewing Myntra’s supply chain structure and whether its operations amount to retail activity under the framework of India's FDI policy.
Amazon and Flipkart Under Investigation for Seller Preferences
In a 2024 report, India’s antitrust authority said Amazon and Flipkart violated competition laws by favoring a small group of sellers on their platforms. These sellers, some linked to the companies themselves, were given priority listings, better terms, and access to platform tools not available to others.
Both firms have denied any wrongdoing. However, the Competition Commission of India (CCI) said internal records suggested coordinated arrangements that disadvantaged smaller vendors.
Smartphone Launches Raise Competition Concerns
The same investigation also pointed to Samsung, Xiaomi, and other smartphone manufacturers working with Amazon and Flipkart to launch products exclusively on their platforms. These deals limited access for rival sellers and were flagged for creating unfair advantages in the online electronics market.
Regulators stated that these agreements made it harder for independent retailers and offline stores to compete, especially in high-demand product categories.
Amazon and Flipkart Investigated for Structuring Around FDI Limits
India’s Enforcement Directorate is separately looking into possible breaches of foreign direct investment rules by Amazon and Flipkart. The agency is reviewing their marketplace structures, funding relationships with sellers, and whether they have complied with FDI limits for e-commerce marketplaces.
In 2024, enforcement teams searched the offices of several third-party sellers associated with Amazon and Flipkart. Documents recovered during those raids are being analyzed to determine if the companies indirectly controlled or influenced retail activity through those sellers.
Apple, Xiaomi Asked for Sales Data
As part of the same inquiry, the Enforcement Directorate has sought transaction records and internal sales data from Apple, Xiaomi, and other smartphone makers. Officials want to examine how these brands distribute their products in India and whether preferential arrangements with Amazon or Flipkart violate current regulations.
Non-Compliant Products Seized From Warehouses
In March 2025, officials from India’s product standards agency raided warehouse facilities run by Amazon and Flipkartin Delhi. They confiscated goods that did not meet national quality standards.
According to officials involved in the inspection, the seized products included electronics and household items that lacked the required certification under Indian law. The agency has since increased its inspections of imported goods sold through e-commerce platforms.
Flipkart Faces $1.35 Billion Penalty Risk
An unresolved case from 2021 also remains open. India’s financial enforcement agency has issued a notice to Flipkartand its founding team, asking them to explain why they should not be fined ₹11,000 crore (approximately $1.35 billion) for earlier violations of foreign investment rules.
This investigation centers on how Flipkart structured its marketplace and whether it operated as a retailer in disguise, which would breach FDI limits.
Swiggy, Zomato Accused of Undercutting Competitors
India’s antitrust regulator has also accepted complaints against Zomato, Swiggy, and Zepto, filed by groups representing local distributors and retailers. The complaints allege that these food delivery services used steep discounts to dominate the market and push out smaller competitors.
The CCI is currently reviewing whether the discounting models were part of a strategy to capture market share using venture capital, rather than reflecting true costs or competition.
Restaurant Listings Investigated for Bias
In addition, Zomato and Swiggy have been accused of favoring certain restaurant chains through algorithmic listing advantages and preferential terms. According to regulatory documents, independent restaurants were often excluded from promotional campaigns or given lower visibility on the platforms.
Investigators say these practices may have limited consumer choice while disadvantaging thousands of smaller businesses that rely on digital delivery platforms.
Multiple Foreign-Backed Firms Under Legal Review in India
India’s regulators are now pursuing multiple lines of inquiry against foreign-backed digital platforms, with a growing number of investigations running simultaneously. The recent enforcement actions suggest a more sustained and detailed approach to monitoring compliance in sectors where global companies hold dominant positions.
Legal experts tracking the cases say that India is now moving beyond warnings and notices and stepping into formal enforcement across investment, competition, and consumer protection law. Companies with significant operations in India may soon face stronger obligations to separate wholesale from retail, disclose seller relationships, and ensure full compliance with domestic trade rules.
Key Facts:
- FDI Rules: Foreign firms can run online marketplaces but cannot sell products they control or own directly.
- Marketplace vs. Inventory: Platforms like Amazon and Flipkart must avoid controlling inventory sold through their sites.
- FEMA Investigations: The Enforcement Directorate uses FEMA to investigate suspected foreign investment violations.
- Flipkart Ownership: Walmart bought a 77% stake in Flipkart in 2018 for $16 billion, making it the largest e-commerce deal in India.
- Amazon Restructure: Amazon changed seller ties in 2021 to reduce regulatory risk under India’s FDI rules.
- Product Seizures: The BIS can seize products from warehouses if they fail to meet Indian safety or quality standards.
- Phone Brand Tie-ups: Xiaomi, Samsung, and others have used exclusive launch deals with Amazon and Flipkart, raising fairness concerns.
- Antitrust Role: The Competition Commission of India investigates anti-competitive deals like exclusive seller or launch arrangements.
- Tax Issues: Swiggy and Zomato were fined in 2022 for not passing GST tax credits to customers—separate from current probes.
- Fast Delivery Growth: Platforms like Zepto are expanding rapidly, prompting complaints of deep discounting hurting small sellers.
- DPIIT Warnings: India’s industry department has advised e-commerce firms not to influence seller pricing or control inventory indirectly.
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