Has the ED Filed a Complaint Against Myntra for FDI Violations Worth Rs 1,654 Crore?
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Synopsis
The Enforcement Directorate has taken a significant step by filing a complaint against Myntra for alleged FDI violations worth Rs 1,654 crore. This development raises questions about the company's business practices and adherence to regulations. Explore the details of this investigation and its implications for Myntra.
Key Takeaways
- ED files complaint against Myntra for alleged FDI violations.
- Accusations involve Rs 1,654.35 crore in illegal foreign investments.
- Myntra's business practices may have circumvented regulations.
- ED's investigation highlights the need for transparency in retail.
- Potential consequences for Myntra's operations in the retail sector.
New Delhi, July 23 (NationPress) The Enforcement Directorate (ED) announced on Wednesday that it has lodged a formal complaint against Myntra Designs Private Limited, along with its associated firms and directors, for purported breaches of the Foreign Exchange Management Act (FEMA), 1999.
This action was initiated by the Bengaluru Zonal Office of the ED, which alleges that the company engaged in unlawful foreign investment practices totaling Rs 1,654.35 crore.
As stated in an official release, the ED began its probe following credible information suggesting that Myntra and its affiliates were allegedly participating in multi-brand retail trading (MBRT) while falsely claiming to operate as a wholesale cash-and-carry business.
The ED emphasized that this arrangement directly contravenes India's Foreign Direct Investment (FDI) policy.
During the investigation, it was uncovered that Myntra Designs Private Limited received foreign direct investment exceeding Rs 1,654 crore by asserting its involvement in wholesale operations.
Nevertheless, the agency discovered that the majority of Myntra's products were sold to another entity, Vector E-Commerce Private Limited, which then sold those products directly to consumers.
The ED pointed out that both Myntra Designs and Vector E-Commerce are part of the same corporate group.
This structure was allegedly devised to circumvent FDI regulations by masking direct retail sales as business-to-business (B2B) transactions, followed by retail (B2C) sales via Vector.
The ED further noted that Myntra's operations breach the FDI regulations established in April and October of 2010, which specify that only a maximum of 25 percent of wholesale sales may be directed to group companies.
In contrast, Myntra conducted 100 percent of its sales to Vector, which the ED claims constitutes a blatant violation of the law.
Following these revelations, the ED has filed a complaint under Section 16(3) of FEMA, 1999, with the Adjudicating Authority.
The agency contends that the involved firms have violated Section 6(3)(b) of FEMA and the Consolidated FDI Policy guidelines, amounting to Rs 1,654.35 crore.
Point of View
It’s imperative to observe this situation with a balanced perspective. The ED's complaint underscores the necessity for transparency and adherence to regulations in the retail sector. Myntra's alleged actions could have far-reaching consequences for its operations and the industry as a whole. We will continue to monitor this situation closely and provide updates as the story develops.
NationPress
23/07/2025
Frequently Asked Questions
What is the main allegation against Myntra?
The Enforcement Directorate has accused Myntra of engaging in illegal foreign investment practices and violating the Foreign Exchange Management Act (FEMA) regulations.
How much is the alleged violation worth?
The alleged violations amount to Rs 1,654.35 crore.
Which companies are involved in the complaint?
The complaint involves Myntra Designs Private Limited, its related companies, and their directors.
What specific law is being cited in the complaint?
The complaint is filed under the Foreign Exchange Management Act (FEMA), 1999.
What type of business practices are being investigated?
The ED is investigating Myntra's alleged misrepresentation of its business operations as wholesale, while engaging in retail sales.
