ED Files FEMA Case Against Myntra for Alleged ₹1,654 Cr FDI Violation

The Enforcement Directorate (ED) has filed a case against myntra Designs Pvt. Ltd., its group entities, and directors for alleged violations of the Foreign Exchange Management Act (FEMA), 1999, involving foreign direct investment (FDI) worth ₹1,654.35 crore.

According to an official release by the ED’s Bengaluru Zonal Office, the investigation revealed that Myntra violated Section 6(3)(b) of FEMA and contravened India’s FDI policy by engaging in Multi-Brand Retail Trading (MBRT) under the pretext of wholesale cash & carry operations.

The probe found that Myntra, which received ₹1,654.35 crore in FDI, routed nearly all of its product sales through Vector E-Commerce Pvt. Ltd., a related group entity. Vector then sold the products directly to retail consumers — effectively converting business-to-business (B2B) transactions into business-to-consumer (B2C) sales. Both companies belong to the same corporate group, raising serious compliance concerns.

As per FDI policy changes dated April 1, 2010, and October 1, 2010, no more than 25% of sales were allowed to be made to group companies in wholesale trading. However, Myntra reportedly sold 100% of its turnover to Vector E-Commerce, violating the policy terms.

The ED concluded that Myntra was misrepresenting its business model, and the structure used by the group was in direct contravention of India’s FDI policy, particularly for multi-brand retail, which is heavily regulated. As a result, the agency has filed a formal complaint under Section 16(3) of FEMA before the Adjudicating Authority.

The case underscores the growing scrutiny on e-commerce and retail businesses that may be circumventing FDI regulations through related-party arrangements or complex ownership structures.

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