Flipkart CEO says business is ready to face any audit

By

Isabelle Crossley

Published
Jul 3, 2019

E-commerce platform Flipkart’s CEO Kalyan Krishnamurthy has said that the business is in full compliance with India’s foreign direct investment regulations and is ready to face any audit required by law.

Krishnamurthy is confident that Flipkart is in full compliance with the new FDI regulations that came into effect in February and that the business could face any audit by its statutory auditors to check for compliance with requirements under Press Note 2, he told ET Bureau on Tuesday.

The statement follows a meeting in June between Flipkart, the new Minister of Commerce and Industry Piyush Goyal, and a number of executives from other foreign-owned e-commerce businesses where there were reportedly questions over Flipkart’s compliance. Businesses were also asked to submit details of their business structures to check that they comply with the FDI norms.

The new FDI regulations prohibit any foreign-owned e-commerce businesses from holding any stocks or selling their own products directly to customers. This caused a problem for marketplaces such as Flipkart and Amazon which operate an array of private labels, especially in the fashion segment. Both businesses had to adapt their business structure and supply chain to comply with the regulations and had to temporarily suspend some private label fashion brands. 

This is also not the first time the business has been questioned about compliance with the new regulations. In March, the Enforcement Directorate launched an investigation into both Flipkart and Amazon at the Delhi High Court. Numerous traders groups such as the Confederation of All India Traders have also criticised Flipkart for non-compliance.