India: Amazon allegedly believed to have broken FDI rules

The ED has sought information regarding Amazons business model and is analyzing the company’s online marketplace model in India, the same source reports. At the same time, Amazon has not been noticed about the legal undertaking, and ED is currently seeking evidence to this end.

Recently, the Reserve Bank of India has sent ED a reference to probe the business models of a few ecommerce companies. This led ED to investigate other companies using similar business models.

Foreign Direct Investment norms in India do not permit FDI in ecommerce, particularly in the business-to-consumer models. As a result, most e-tailers currently follow the online market place model, connecting sellers to buyers and getting a fee from the sales.