India E-commerce Firms Face Regulatory Scrutiny Amid Allegations of Non-Compliance

India is scrutinizing foreign e-commerce firms, including Amazon and Walmart, for alleged non-compliance with local laws. Regulatory challenges include investigations into alleged breaches of rules, antitrust violations, and violations of investment rules. Some companies, such as Samsung and Xiaomi, are also under investigation for colluding with Amazon and Flipkart. The Indian government is taking steps to protect local businesses.

India's booming e-commerce sector has recently faced intense regulatory scrutiny from authorities investigating alleged non-compliance with local laws by foreign companies. This heightened scrutiny is part of the government's efforts to protect local businesses and ensure fair competition.

Global giants Amazon (AMZN.O) and Walmart (WMT.N) are among the firms under investigation. Walmart's Indian fashion arm, Myntra, is being probed for allegedly breaching rules that ban foreign-funded wholesale retailers from selling directly to consumers [1]. Additionally, an Indian antitrust investigation in 2024 found that Amazon and Flipkart violated local competition laws by giving preference to select sellers on their shopping websites [1]. The companies deny any wrongdoing.

The investigation into Amazon and Flipkart also found that smartphone companies like Samsung and Xiaomi colluded with these e-commerce giants to exclusively launch products on their Indian websites, in breach of antitrust laws [1]. Furthermore, India's financial crime agency has been investigating Amazon and Flipkart separately for alleged breaches of investment rules [1]. In 2024, the agency raided offices of some sellers operating on these platforms.

The Indian government's scrutiny extends to other sectors as well. Indian consumer products distributors have filed an antitrust case against big fast-delivery businesses Zomato, Swiggy (SWIG.NS), and Zepto, calling for an investigation into alleged deep discounting practices [1]. An investigation by India's antitrust body found that Zomato and Swiggy breached competition laws, with their business practices favoring select restaurants listed on their platforms [1].

These regulatory challenges highlight the Indian government's determination to protect local businesses and ensure compliance with local laws. As the investigations continue, foreign e-commerce firms are likely to face significant challenges and potential penalties, which could impact their operations and growth prospects in the Indian market.

References:
[1] Reuters. (July 23, 2025). Amazon, Walmart face regulatory scrutiny in India. Retrieved from https://www.reuters.com/legal/litigation/amazon-walmart-global-e-commerce-firms-face-regulatory-scrutiny-india-2025-07-23/