India’s financial crime agency, the Enforcement Directorate (ED), has sought sales data from global smartphone makers like Apple and Xiaomi as part of its ongoing probe into e-commerce giants Amazon and Flipkart. The investigation, taking place in New Delhi, centers around alleged violations of Indian foreign investment laws that restrict e-commerce platforms from controlling inventory. The ED’s actions also come as India and the US work toward a potential trade deal, where e-commerce regulations are under scrutiny.
India’s Enforcement Directorate (ED), a federal agency responsible for investigating economic crimes, has recently approached global smartphone manufacturers including Apple Inc. (United States) and Xiaomi Corp. (China), seeking their online sales data and documentation related to e-commerce activity with Amazon India and Flipkart, which is majority-owned by Walmart Inc. (United States).
The data request is part of an ongoing investigation into potential violations of India’s foreign direct investment (FDI) laws.
Under current Indian law, foreign-owned e-commerce platforms are permitted to operate only as neutral marketplaces. They are prohibited from exerting direct control over product inventory or forming exclusive arrangements with sellers, a rule critics say is often sidestepped.
According to sources familiar with the matter, the ED’s letters—sent in recent weeks—seek to understand the nature of business dealings between smartphone makers and e-commerce platforms. This includes any financial contracts or exclusive sales agreements that may have given undue preference to specific sellers or distorted fair competition.
The probe takes place amid broader geopolitical negotiations, with India and the United States reportedly nearing a trade deal. E-commerce regulations in India have been a sticking point in those talks, as US-based companies push for market liberalization.
India’s small trader associations have long accused e-retail giants of undercutting traditional stores through deep online discounts and preferential treatment of select brands. They argue that such practices have severely impacted foot traffic and sales in physical mobile phone outlets.
A 2021 Reuters investigation revealed that Amazon had significant control over inventory managed by some of its key sellers—claims that the company has denied. Meanwhile, a 2024 antitrust probe concluded that Amazon and Flipkart had favored certain sellers and entered into exclusive arrangements with smartphone manufacturers like Samsung and Xiaomi—allegations that both firms have yet to formally respond to. That case is ongoing.
The Indian government’s official stance suggests that while smartphone companies like Apple and Xiaomi are cooperating by providing information, they are not currently being accused of wrongdoing. However, if violations are confirmed, monetary penalties could be imposed on the e-commerce firms involved.
According to Counterpoint Research, online platforms account for 40% of smartphone sales in India. In 2024, Xiaomi and Samsung held a combined 33% share, with Apple at 7%—reflecting the dominant role of digital channels in the country’s mobile phone market.
India’s e-retail sector is poised for rapid growth, with Bain & Company projecting it will surpass USD 160 billion by 2028, up from an estimated USD 60 billion in 2023. As the market expands, regulatory scrutiny over foreign participation and fair business practices is expected to intensify.
