India’s financial crime watchdog has privately sought sales data and internal documents from smartphone giants Apple and Xiaomi, as part of a broader investigation into alleged violations by Amazon and Walmart-owned Flipkart, according to sources familiar with the matter.
The probe, led by the Enforcement Directorate (ED), centres on suspicions that the two e-commerce platforms breached foreign investment rules by holding inventory and exerting control over online goods listings — activities that are prohibited under Indian law. India’s regulations mandate that foreign online retailers operate solely as marketplaces, serving as intermediaries between independent buyers and sellers.
Backdrop of a Possible India-US Trade Agreement
The development comes as India and the United States edge closer to finalising a trade deal. One senior Indian government official told Reuters that India’s restrictive e-commerce policies have been a point of contention in the negotiations, with US officials pushing for greater access to the Indian market. This ongoing scrutiny of major American firms like Amazon may further complicate the delicate trade discussions.
Agency Seeks Data on Smartphone Sales
In recent weeks, the ED has reached out to smartphone manufacturers, including Apple and Xiaomi, requesting data on their online sales channels. Three industry executives and a senior Indian official — all of whom spoke on condition of anonymity due to the confidential nature of the probe — confirmed the outreach.
The agency reportedly requested financial contracts and information on the firms’ commercial relationships with Amazon and Flipkart. One source stated that Apple received the ED’s formal request in March.
Amazon, Flipkart, and Apple have yet to issue any public comments in response to the report. Xiaomi declined to comment, and the Enforcement Directorate did not respond to requests for clarification.
The senior government official emphasised that the smartphone companies had merely been asked to furnish information and are not under investigation themselves. “Eventually, if there’s wrongdoing, there will be monetary penalties on the e-commerce companies,” the official added.
India’s small retail traders have for years accused Amazon and Flipkart of undercutting local businesses by offering steep online discounts and secretly favouring select sellers — a practice they say is in violation of marketplace neutrality. Both companies have consistently denied any breach of Indian laws.
A 2021 Reuters investigation, based on leaked internal documents, suggested Amazon had significant control over inventory managed by a handful of preferred sellers. The company has denied the allegations.
Separately, in 2023, India’s antitrust regulator found that Amazon and Flipkart had favoured certain sellers and coordinated with phone makers such as Samsung and Xiaomi to launch devices exclusively online — raising further competition concerns. That case remains ongoing, and the companies involved have not publicly responded to those findings.
According to Bain & Company, India’s e-retail sector is expected to grow from $57–60 billion in 2023 to over $160 billion by 2028, driven largely by smartphone sales and expanding internet access. Data from Counterpoint Research shows that online purchases account for nearly 40% of phone sales in India. In 2024, Samsung and Xiaomi jointly held about 33% of the smartphone market, while Apple held a 7% share.
As India’s digital marketplace booms, scrutiny over compliance with its foreign investment and competition laws appears set to intensify — with global tech and consumer electronics brands increasingly caught in the crosshairs.
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