ED Registers FEMA Case on Myntra for Rs.1,654 Cr Violations

New Delhi: The Enforcement Directorate (ED) has registered a case under the Foreign Exchange Management Act (FEMA) against Flipkart backed fashion e commerce platform Myntra, its associated companies, and several directors, alleging foreign direct investment (FDI) violations of ₹1,654 crore.

The ED’s Bengaluru zonal office filed the complaint under Section 16(3) of FEMA after receiving “credible information” that Myntra Designs Pvt. Ltd. and its related entities were engaged in multi brand retail while posing as “wholesale cash and carry” businesses, activities prohibited under India’s FDI rules.

According to the agency, Myntra Designs declared itself a wholesale trader yet received foreign investment totalling ₹1,654,35,08,981. It then sold most of its merchandise to Vector E Commerce Pvt. Ltd., a related party company within the same group, which in turn retailed the goods to consumers. Investigators say Vector was created to mask business to consumer (B2C) sales as business to business (B2B) transactions, thereby contravening FEMA provisions and the consolidated FDI policies dated April 1 and October 1, 2010, which restrict intra group sales to 25 percent.

“At present, FDI is barred in the inventory based model of e commerce; it is allowed only through the marketplace model,” the ED noted.

Myntra, headquartered in Bengaluru and part of the Walmart owned Flipkart Group, said it is “deeply committed to upholding all applicable laws” and has yet to receive a copy of the complaint. “We remain fully prepared to cooperate with the authorities at any time,” a company spokesperson said.

Founded in 2007, Myntra claims 70 million monthly active users and offers more than 3.9 million product styles from 9,700 brands. The company said it continues to support India’s textile and apparel ecosystem by helping artisans, weavers, and local brands reach a global market.