ED registers case against Myntra for Rs 1,654-crore FDI violation in retail model
Myntra received foreign direct investment amounting to Rs 1,654.35 crore on pretext of operating a wholesale business
PTC Web Desk: The Enforcement Directorate (ED) has registered a case against Indian fashion e-commerce platform Myntra Designs Pvt. Ltd., along with its associated companies and directors, for allegedly violating Foreign Direct Investment (FDI) norms involving Rs 1,654.35 crore.
The ED’s Bengaluru Zonal Office initiated the case based on reliable inputs indicating that Myntra and its related entities were engaged in Multi-Brand Retail Trading (MBRT) while falsely presenting themselves as operating under a 'Wholesale Cash & Carry' model — a direct breach of India’s FDI policy.
During the investigation, the ED found that Myntra received foreign investments worth Rs 1,654.35 crore under the pretext of running a wholesale business. However, it was discovered that the majority of goods were sold exclusively to Vector E-Commerce Pvt. Ltd., a related entity from the same corporate group. Vector, in turn, retailed these products to individual customers.
According to the agency, this setup was deliberately structured to disguise Business-to-Consumer (B2C) sales as Business-to-Business (B2B) transactions between Myntra and Vector, which was followed by B2C sales between Vector and retail customers. This arrangement was aimed at circumventing the restrictions imposed on multi-brand retail through FDI regulations.
Further, as per FDI policy amendments effective from April 1, 2010, and October 1, 2010, companies under the wholesale model can sell only up to 25% of their goods to group companies. Myntra allegedly violated this provision by selling 100% of its goods to Vector E-Commerce Pvt. Ltd.
The ED concluded that Myntra Designs Pvt. Ltd. and its affiliates breached Section 6(3)(b) of the Foreign Exchange Management Act (FEMA), 1999, and violated provisions of the Consolidated FDI Policy.
Based on these findings, the agency has filed a formal complaint under Section 16(3) of FEMA for further legal proceedings. Myntra has not yet issued any official response to the development.