Government investigates ownership structures of dark stores in fast-food industry, report says

According to media reports, authorities recently investigated the ownership structure of e-commerce companies and their secret transactions and contacted senior executives in the e-commerce industry.

Government officials have contacted these executives about the mini-warehouses operated by these companies, The Economic Times reported, citing sources in the matter. These dark stores are the backbone of the e-commerce industry, which promises deliveries within 15 to 30 minutes.

However, India’s foreign direct investment regulations do not allow online marketplaces funded by foreign players to own inventory or control sellers on the platforms. Due to these restrictions, dark stores are owned by separate entities, but not by the FTA players.

The report cited sources as saying the government was seeking more clarity on the issue as quick-sale traders had disrupted local shops and retailers.

Recently, the management of a leading company in the industry said that it had met Piyush Goyal, Minister of Commerce and Industry, and his team and shared with them information about the nature of investors in the company and their long-term plans.

“Government officials are trying to understand whether platforms are compliant with dark store rules — at the ownership level — while also raising significant foreign funding in recent months. This is intelligence gathering, as this sector is the most turbulent in terms of consumer activity, and it will certainly have an impact,” an industry source who has met an official on the matter was quoted as saying.

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The chief executive also said discussions were underway to add a more detailed framework for the quick trade segment to the broader e-commerce policy.