Myntra Faces ₹1,654 Crore FEMA Complaint from ED Over FDI Breach

India’s Enforcement Directorate (ED) has registered a case under the Foreign Exchange Management Act (FEMA) against Myntra Designs Pvt Ltd, its associated companies, and its directors. Reports suggest that the case involves alleged FDI violations worth ₹1,654.35 crore.

The agency stated that Myntra received foreign direct investment while operating under a wholesale cash-and-carry model. However, it allegedly sold all goods to Vector E-Commerce Pvt Ltd, a related company, which then retailed the products to customers.

Violation of FDI Norms

FDI policy in 2010 allowed wholesale businesses to sell only 25% of their goods to group companies. The ED said Myntra routed 100% of its sales to Vector, violating the policy and provisions of Section 6(3)(b) of FEMA.

According to the ED, the use of Vector E-Commerce allowed Myntra to split a retail transaction into two, one from Myntra to Vector (B2B) and the other from Vector to customers (B2C). This structure is at the centre of the alleged contravention.

The ED filed the case after receiving what it called credible information about the company’s operations. It found that the structure enabled Myntra to carry out multi-brand retail trade while claiming to follow wholesale norms.

Myntra's Response

Myntra said it has not yet received the complaint or documents but will cooperate with authorities. The company added that it is committed to legal compliance and due process.

The ED had earlier conducted searches at vendor premises associated with Amazon and Flipkart across multiple cities for similar concerns around FDI and foreign exchange rules.

Read More: IPO Bound Flipkart to Buy Back $50 Million in ESOPs!

Conclusion

The complaint has been submitted to the Adjudicating Authority under FEMA. The case brings out continued scrutiny of how e-commerce platforms operate under India’s FDI regulations.

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