ED Files Formal Complaint Against Myntra for FDI Norms Violation

The Enforcement Directorate (ED) has taken legal action against Myntra Designs Pvt Ltd and its associated entities, accusing them of circumventing India's foreign direct investment (FDI) regulations through alleged wholesale operations.

Allegations of Rs 1,654.35 Crore Contravention

Under Section 16(3) of the Foreign Exchange Management Act (FEMA), 1999, the ED has highlighted significant breaches, pointing to a complex scheme involving multi-brand retail trade (MBRT) disguised as wholesale operations.

Investigation Uncovers Two-Step Retail Strategy

The ED's probe revealed that Myntra, declaring itself as a wholesale business, received foreign investments amounting to Rs 1,654.35 crore. These goods were predominantly sold to Vector E-Commerce Pvt Ltd, a related entity, which then retailed them directly to consumers, bypassing FDI restrictions on retail trading.

Myntra's Response

A Myntra spokesperson stated the company has not yet received the complaint but remains committed to full compliance and cooperation with authorities, emphasizing their role in digitizing India's textile and apparel ecosystem.

Regulatory Risks Ahead of Flipkart's Public Listing

This development emerges as Flipkart, Myntra's parent company, gears up for a potential public offering, with investors keenly observing the regulatory challenges within the group.