Flipkart faces CCI complaint as sellers allege FDI rule breach

Key Takeaways

• Forum for Internet Retailers, Sellers and Traders (FIRST) filed a CCI complaint alleging Flipkart favours 33 preferred sellers through its wholesale arm
• Zetwerk received SEBI approval for its IPO, with operating income estimated at Rs 15,900 crore for FY26
• TCS added 9,300 employees in Q1, its largest quarterly addition in four years, while revenue per employee rose 6.5% YoY

A group of ecommerce sellers has filed a formal complaint with the Competition Commission of India (CCI), accusing Flipkart of abusing its market position through deep discounts and preferential treatment for a select group of merchants. The complaint, filed on July 6 by the Forum for Internet Retailers, Sellers and Traders (FIRST), adds to growing scrutiny of how foreign-owned ecommerce platforms operate in India.

What does the complaint allege?

FIRST claims Flipkart operates an inventory-led model disguised as a marketplace. The core allegation: Flipkart's wholesale arm supplies goods below cost to 33 preferred sellers, enabling discounts that independent merchants cannot match. Flipkart absorbs the losses, and the preferred sellers gain an unfair edge.

The association says it has logged over 300 complaints from micro, small and medium enterprise (MSME) sellers who claim these practices have damaged their businesses. If proven, this would violate India's foreign direct investment rules, which bar foreign-owned ecommerce firms from operating an inventory-led model.

Flipkart is majority foreign-owned. Walmart acquired a 77% stake in the company for $16 billion in 2018. That ownership structure makes FDI compliance a sensitive issue.

This is not an isolated incident. Earlier this week, the All India Consumer Products Distributors Federation urged the government to review how Amazon and Flipkart comply with FDI rules in the fast-growing quick commerce segment. Regulators are clearly paying attention.

Zetwerk clears SEBI hurdle for IPO

In other major news, contract manufacturer Zetwerk has secured approval from the Securities and Exchange Board of India (SEBI) to launch its initial public offering. The IPO will comprise a mix of fresh shares and an offer for sale (OFS) by existing investors.

Zetwerk confidentially filed its draft red herring prospectus (DRHP) with SEBI on March 29. The final issue size and valuation will be set through the book-building process.

The company was reportedly in talks to raise around Rs 500 crore in pre-IPO funding from Bharat Value Fund and a group of high-net-worth individuals at a valuation of Rs 25,000-26,000 crore. That figure is largely in line with its previous private market value.

Crisil Ratings estimates Zetwerk's operating income rose to Rs 15,900 crore in FY26, up from Rs 12,800 crore a year earlier. The ratings agency did not disclose profit or loss figures for FY26. In FY25, Zetwerk trimmed its net loss to Rs 371 crore from Rs 918 crore the previous year. The loss reduction signals improving unit economics, though profitability remains elusive.

TCS posts strong Q1, adds 9,300 employees

Shares of Tata Consultancy Services (TCS) climbed more than 4% on Friday after the IT major reported a 5% year-on-year increase in consolidated net profit. Net profit rose to Rs 13,349 crore from Rs 12,760 crore a year earlier. Revenue jumped 14% to Rs 72,275 crore, with an order book of $9.5 billion for the quarter.

TCS shares eventually closed 1% higher at Rs 2,069 on the BSE. Morgan Stanley said the Q1FY27 print beat expectations marginally. The brokerage noted that upbeat commentary on Q2 and AI services reaching a $2.6 billion annualized revenue run rate likely buoyed the stock.

The headline number: TCS added around 9,300 employees in the June quarter, taking total headcount to 593,798. That is its biggest quarterly addition in four years, cutting against the narrative of AI-led job losses in IT services.

CEO K Krithivasan pushed back on those fears directly. "We do not believe that there would be a drastic reduction in employment," he said. The numbers support his confidence. Revenue per employee rose 6.5% year-on-year in Q1FY27, outpacing employee costs, which grew 5.9%.

US ramps up H-1B scrutiny for Indian IT

A fresh US Department of Labor investigation involving H-1B visas and green cards could put Indian IT outsourcing firms under sharper scrutiny. Whistleblowers have triggered an audit that may examine how IT services companies use the visa program.

For TCS, Infosys, Wipro and their peers, H-1B visas remain essential for staffing client projects in the United States. Any tightening of the program adds operational complexity and could accelerate hiring in the US at higher costs.

Tencent eyes Manus AI

In a separate development, Chinese tech giant Tencent is reportedly evaluating an investment in Manus, the AI agent startup that made waves earlier this year. The interest signals growing competition among tech giants to back promising AI companies, particularly those building autonomous agents.

Frequently Asked Questions

What is the FIRST complaint against Flipkart about?

FIRST alleges Flipkart favours 33 preferred sellers by supplying them goods below cost through its wholesale arm, enabling discounts independent sellers cannot match. This allegedly violates India's FDI rules barring foreign-owned ecommerce firms from inventory-led models.

When did Zetwerk file for its IPO?

Zetwerk confidentially filed its draft red herring prospectus with SEBI on March 29, 2025. It received SEBI approval recently.

How many employees did TCS add in Q1 FY27?

TCS added approximately 9,300 employees in the June quarter, its largest quarterly addition in four years, bringing total headcount to 593,798.

What is Zetwerk's estimated revenue for FY26?

Crisil Ratings estimates Zetwerk's operating income at Rs 15,900 crore for FY26, up from Rs 12,800 crore in the previous year.

Why is the H-1B visa scrutiny significant for Indian IT companies?

Indian IT firms rely heavily on H-1B visas to staff client projects in the US. Increased scrutiny could raise operational complexity and labor costs if companies must hire more US-based workers at higher salaries.

Source: Tech-Economic Times