New Delhi/Bengaluru, July 2025 — The Enforcement Directorate (ED) has filed a formal complaint under the Foreign Exchange Management Act (FEMA) against Myntra Designs Pvt Ltd, its associated group companies, and senior directors, alleging FDI policy violations totaling approximately ₹1,654 crore.
What the ED Alleges
The investigation claims Myntra misclassified its business as “Wholesale Cash & Carry” to attract foreign direct investment, permitted at 100% under India’s 2010 FDI rules. However, Myntra reportedly routed most of its inventory sales to Vector E‑Commerce Pvt Ltd a company within the same corporate group—which in turn retailed the goods to consumers.
The Enforcement Directorate alleges this structure bypassed FDI limits for Multi‑Brand Retail Trading (MBRT) and breached FEMA provisions:
- Only up to 25% of wholesale sales can be made to related entities a cap Myntra allegedly exceeded.
- The arrangement effectively masked direct-to-consumer undertakings as wholesale.
Regulatory Climate and Sector Context
The move reflects escalating regulatory scrutiny of foreign-funded e-commerce platforms. Both Amazon and Flipkart have previously faced similar investigations for alleged violations related to inventory control and retail trade structure.
Myntra, backed by Walmart and valued at nearly $599 million in annual revenue, currently serves over 70 million monthly active users.
Company Response
In an official statement, Myntra said it has not received a formal notice or complaint documentation yet but reaffirmed its commitment to compliance and cooperation. “We remain fully committed to upholding all applicable laws… operating with the highest standards of integrity.”
What Happens Next
Under Section 16(3) of FEMA, the ED’s complaint may trigger show-cause notices to directors and a formal adjudication process. The outcome could include financial penalties, restructuring directives, or legal penalties depending on the adjudicating authority’s findings.
Key Insight:
This development underscores the need for strict regulatory alignment in e-commerce structuring especially for firms backed by overseas capital. The inquiry sends a clear message: masking retail as wholesale isn’t just risky it’s actionable.
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