The Department of Industrial Policy and Promotion (DIPP) has directed the FDI violation issues related to Walmart-Flipkart deal to the Reserve Bank of India and the Directorate of Enforcement under the Ministry of Finance.
Any violation of foreign direct investment policy will be governed by the Reserve Bank of India and the Directorate of Enforcement under the Ministry of Finance, said DIPP in a letter on Thursday.
Political and cultural organisation Swadeshi Jagran Manch in a letter to the DIPP under the Ministry of Commerce requested the Competition Commission of India to make enquiries into the Walmart-Flipkart deal before approving the merger.
The US-based retail giant recently acquired 77 per cent stake in the Singapore-based eCommerce company Flipkart.
The organisation alleged that the deal violates the FDI norms as the acquisition is a means of backdoor entry of Walmart into the Indian multi-brand retail.
FDI is not allowed in the multibrand retail and ecommerce to protect small traders and manufacturers.
The letter further alleged that through a complex corporate structure the management of Flipkart is presenting itself as an entity in B2B segment whereas it is operating in both in B2B and B2C segments.
The Commerce Ministry in its response to the allegation made by Swadeshi Jagran Manch, which concerns the approval of the recent acquisition of Flipkart by Walmart, said that any violation of FDI is governed by penal provision in the Foreign Exchange Management Act 1999 administered by the Reserve Bank of India and Directorate of Enforcement under the Ministry of Finance.
The letter from Department of Industrial Policy and Promotion further added that similar references of allegation against e-commerce majors with regards to violation of FDI policy were sent to RBI/Enforcement Directorate.