New Delhi: The Enforcement Directorate (ED) has filed a complaint under the Foreign Exchange Management Act (FEMA), 1999, against Myntra Designs Private Limited, its associated entities, and directors for alleged foreign direct investment (FDI) violations amounting to ₹1,654.35 crore.
According to the ED, the Bengaluru Zonal Office initiated the action based on credible inputs suggesting that Myntra and its related firms were engaged in Multi-Brand Retail Trading (MBRT) under the guise of ‘Wholesale Cash & Carry’ operations—contravening the existing FDI policy.
The ED’s investigation found that Myntra Designs Pvt Ltd had received FDI amounting to ₹1,654.35 crore, claiming to operate as a wholesale business. However, the agency said that Myntra sold the bulk of its goods to Vector E-Commerce Pvt Ltd, a related party within the same group, which then retailed the products to end consumers.
The agency alleged that the arrangement was structured to disguise business-to-consumer (B2C) retail operations as business-to-business (B2B) transactions. “Vector E-Commerce Pvt Ltd was used to bifurcate the B2C transaction into B2B (Myntra to Vector) and then B2C (Vector to consumers),” the ED stated.
Further, the ED noted that Myntra Designs Pvt Ltd failed to comply with conditions applicable to wholesale trading. Specifically, it violated the FDI policy amendments of April 1, 2010, and October 1, 2010, which permitted only up to 25% of wholesale sales to group companies. Myntra, however, reportedly sold 100% of its goods to Vector E-Commerce, violating those limits.
As a result, the ED has accused Myntra and its affiliates of breaching Section 6(3)(b) of FEMA, 1999, and the relevant provisions of the consolidated FDI policies in effect at the time.
The case marks a significant development in the enforcement of FDI norms in India’s e-commerce and retail sectors.
