Myntra faces ED probe over ₹1,654cr FDI violation
What's the story
Myntra, one of India's leading fashion e-commerce platforms, is under investigation by the Enforcement Directorate (ED) for alleged violations of Foreign Direct Investment (FDI) rules. The agency has accused Myntra and its associated companies of conducting Multi-Brand Retail Trade (MBRT) activities while falsely claiming to operate as 'Wholesale Cash & Carry' businesses. This misrepresentation, according to the ED, directly contravenes India's FDI policy that imposes stringent conditions on foreign investment in MBRT.
Allegations
Myntra allegedly sold goods directly to end consumers
The ED has alleged that Myntra violated foreign exchange rules involving ₹1,654 crore foreign investment. The agency claims that the company funneled most of its sales through M/s Vector E-Commerce Pvt. Ltd., a company in the same corporate group. Vector then sold goods directly to end consumers, effectively disguising retail (B2C) transactions as wholesale (B2B) dealings on paper.
Complaint details
Case registered under Section 16(3) of FEMA
The ED's complaint accuses Myntra of misusing FDI permissions meant for wholesale trading to conduct large-scale retail operations. This practice is strictly prohibited under India's FDI norms for multi-brand retail. The agency has registered a case against Bengaluru-headquartered Myntra, its linked companies and directors under Section 16(3) of the Foreign Exchange Management Act (FEMA) after receiving "credible information" about these alleged violations.
Policy compliance
Myntra sold 100% of its goods to related group companies
The ED also noted that under the FDI policy amendments of April 1, 2010, and October 1, 2010, companies operating under the wholesale model can sell only up to 25% of their goods to related group companies. However, Myntra allegedly sold 100% of its goods to Vector E-Commerce. The agency concluded that this act violated Section 6(3)(b) of FEMA, 1999 and relevant provisions of the Consolidated FDI Policy.