India’s investigation into the local business practices of U.S. streaming giant Netflix has drawn significant attention, focusing on allegations of visa violations, racial discrimination, and other corporate misconduct. These developments, which were revealed in a government email, signal increasing scrutiny of foreign companies operating in the country, especially as they expand their presence in one of the world’s largest markets.

Allegations Against Netflix: Visa and Tax Violations

The investigation, brought to light in a July 20 email from the Foreigners Regional Registration Office (FRRO) in New Delhi, accuses Netflix of multiple violations. According to the email, written by FRRO official Deepak Yadav and addressed to Nandini Mehta, Netflix’s former director of business and legal affairs for India, the streaming platform is accused of violating visa regulations, evading taxes, and engaging in illegal business structures.

“We have received certain details in this regard w.r.t (with respect to) the stated company’s conduct, visa violation, illegal structures, tax evasion, and other malpractices,” Yadav wrote in the email. He also mentioned that Netflix allegedly engaged in racial discrimination while conducting its business operations in India, raising concerns about the company’s internal culture and treatment of employees.

Nandini Mehta’s Lawsuit and Connection to the Investigation

Nandini Mehta, who left Netflix in 2020, has been involved in her own legal battle against the company. Mehta has filed a lawsuit in the U.S. alleging wrongful termination, as well as racial and gender discrimination—charges that Netflix has vehemently denied. Mehta, who worked for Netflix at both its Los Angeles and Mumbai offices between 2018 and 2020, expressed her support for the Indian government’s investigation and urged authorities to make their findings public. However, she did not provide further details on the specific allegations raised by the Indian government.

In response to Mehta’s lawsuit in the U.S., Netflix claimed that her termination was based on her misuse of corporate funds, stating that she had used her corporate credit card for tens of thousands of dollars in personal expenses. The company has denied “each and every allegation” of wrongful termination and discrimination.

Netflix’s Position and Market Presence in India

Netflix has denied knowledge of the Indian government’s investigation, with a company spokesperson stating they were “unaware of an investigation by the Indian government.” However, the accusations add to the growing regulatory pressures that the streaming giant faces in India. With approximately 10 million users, India represents a key growth market for Netflix, which has invested heavily in producing local content featuring Bollywood stars and tapping into the country’s affluent middle class.

Over the years, Netflix has had to navigate various controversies in India, including backlash over content that some viewers deemed culturally insensitive. For example, earlier this year, the company faced criticism over an Indian series about a plane hijacking, which depicted Muslim hijackers disguised as Hindus. Following social media outrage and government backlash, Netflix was forced to add disclaimers to the series. The incident exemplifies the delicate balance that Netflix must strike as it caters to the diverse cultural and religious sensitivities in India.

The Broader Investigation: Visa Compliance and Regulatory Crackdowns

While Netflix’s alleged tax evasion has been previously reported— with the company actively challenging a 2023 tax demand— the broader scope of the investigation, including visa compliance and racial discrimination, is a new development. The email from the FRRO did not specify which Indian agencies are involved in the investigation, but the FRRO is known to work closely with the Intelligence Bureau, India’s domestic intelligence agency. This collaboration points to a potentially larger and more comprehensive probe into Netflix’s operations in India.

Visa compliance has been a contentious issue for foreign companies in India in recent years. In 2022, the Indian government accused Chinese smartphone manufacturer Vivo and its affiliates of breaching visa regulations by visiting “sensitive” regions without the necessary permissions. The FRRO plays a key role in monitoring visa compliance and works as a liaison between foreign businesses and other Indian government departments.

India classifies certain regions, such as Jammu & Kashmir and parts of Sikkim, as restricted areas, requiring special permissions for foreign nationals to visit. While it is unclear whether Netflix is accused of visiting any of these restricted areas, the investigation’s inclusion of visa violations suggests that the company may have breached Indian regulations on the movement of foreign workers.

Wider Implications for Foreign Businesses Operating in India

India’s investigation into Netflix underscores the growing scrutiny that foreign businesses face as they expand into the country. With its burgeoning middle class and growing digital economy, India represents a lucrative market for multinational companies. However, as India opens its doors to foreign investment, it is also tightening its regulatory framework, particularly around issues like tax compliance, visa regulations, and corporate governance.

For streaming platforms like Netflix, which rely heavily on local content production and foreign talent, visa compliance is a crucial issue. Any violation of these regulations could result in fines, operational disruptions, and reputational damage. Furthermore, the allegations of racial discrimination within Netflix’s Indian operations highlight the challenges that global companies face in ensuring fair and equitable treatment of employees across different regions.

A Challenging Landscape for Netflix in India

As Netflix navigates the investigation by Indian authorities, the company must grapple with the wider implications of these allegations on its business strategy in the country. With India emerging as a key growth market, the outcome of this probe could impact Netflix’s long-term prospects in the region. The regulatory challenges, coupled with controversies over content and internal practices, present a complex landscape for Netflix as it seeks to solidify its position in one of the world’s most populous countries.

In the broader context, this investigation signals India’s intent to hold foreign businesses accountable to local laws and regulations. As the Indian market continues to attract global players, companies like Netflix will need to remain vigilant about compliance and transparency to avoid falling foul of the country’s increasingly stringent regulatory framework.

(Adapted from StraitsTimes.com)