The Enforcement Directorate on Thursday conducted searches against some of the “main vendors” operating on the platforms of e-commerce giants Amazon and Flipkart as part of a foreign direct investment “violation” investigation, official sources said.

A total of 19 premises of these “preferred” vendors located in Delhi, Gurgaon and Panchkula (Haryana), Hyderabad (Telangana) and Bengaluru (Karnataka) were covered as part of the action, the sources said.

It is learnt that the ED inspected documents and took copies of some from the premises of about six such vendors who were not named.

The sources said a probe has been initiated by the federal agency under the provisions of the Foreign Exchange Management Act (FEMA) after it received several complaints against the two large e-commerce companies where it is alleged that they were “violating India’s FDI (foreign direct investment) rules by directly or indirectly influencing the sale price of goods or services and not providing level playing field for all the vendors”.

There was no immediate response from the two e-commerce companies.

The Confederation of All India Traders (CAIT) welcomed the ED action.

“The CAIT, along with several other trade bodies, has been raising these issues for the past few years. I welcome the Enforcement Directorate’s actions as a step in the right direction,” CAIT secretary-general and BJP MP from Delhi Praveen Khandelwal said in a statement.

He claimed that the Competition Commission of India (CCI) had also issued “penalty notices” to Amazon and Flipkart, and their “preferred” sellers, for “engaging” in anti-competitive practices that have adversely affected small traders and grocery stores.

As per existing rules, 100 per cent FDI is allowed through automatic route in the marketplace model of e-commerce. But overseas investment is not permitted in an inventory-based model.

In the marketplace model, e-commerce entities can only provide a platform for third-party sellers and they cannot own the inventory. They also cannot directly or indirectly influence the price of the goods.

It has been reported in the past that the CCI, which works to ensure fair business practices across sectors in the marketplace, is already looking into alleged anti-competitive ways of e-commerce companies.

Truecaller probe

The Income-Tax Department on Thursday carried out a survey operation at offices of Swedish caller ID platform Truecaller on charges of tax evasion, official sources said.

The Stockholm-headquartered company said it was cooperating with the investigators.

Tax officials said the survey operation was aimed to gather detailed information and check documents in connection with certain charges of tax evasion including those pertaining to transfer pricing (TP) issues.