ED Takes Action Against Myntra for Alleged FEMA Violations

The Enforcement Directorate has initiated a formal complaint against Myntra Designs Private Limited for alleged violations of the Foreign Exchange Management Act (FEMA). The complaint, filed by the ED's Bengaluru Zonal Office, accuses Myntra of engaging in illegal foreign investment practices amounting to Rs 1,654.35 crore. Investigations revealed that Myntra misrepresented its operations as wholesale while primarily selling to a related company, Vector E-Commerce, which then sold directly to consumers. This structure allegedly aimed to bypass FDI regulations. The ED's findings indicate a significant breach of the law, leading to the formal complaint under FEMA.

By Narendra Chaudhary Jul 23, 2025, 16:20 IST

Enforcement Directorate Files Complaint Against Myntra

New Delhi, July 23: The Enforcement Directorate (ED) announced on Wednesday that it has lodged a formal complaint against Myntra Designs Private Limited, along with its associated companies and directors, for purported breaches of the Foreign Exchange Management Act (FEMA), 1999.

This action was initiated by the ED's Bengaluru Zonal Office, which has accused the company of engaging in unlawful foreign investment practices totaling Rs 1,654.35 crore.

As per an official statement, the ED's investigation was prompted by credible information suggesting that Myntra and its affiliates were involved in multi-brand retail trading (MBRT) while falsely claiming to operate as a wholesale cash-and-carry business.

The ED indicated that this arrangement directly contravenes India's Foreign Direct Investment (FDI) policy.

Investigations revealed that Myntra Designs Private Limited had attracted foreign direct investment exceeding Rs 1,654 crore by asserting its involvement in wholesale operations.

However, the agency discovered that the majority of Myntra's products were sold to another entity, Vector E-Commerce Private Limited, which subsequently sold these items directly to retail consumers.

Concerns were raised as both Myntra Designs and Vector E-Commerce are part of the same corporate group.

This structure was allegedly established to circumvent FDI regulations by masking direct retail sales as business-to-business (B2B) transactions, followed by retail (B2C) sales through Vector.

The ED emphasized that Myntra's operations breached FDI regulations enacted in April and October 2010, which stipulate that only up to 25 percent of wholesale sales can be made to group companies.

In contrast, Myntra reportedly conducted 100 percent of its sales to Vector, which the ED claims constitutes a clear violation of the law.

In light of these findings, the ED has filed a complaint under Section 16(3) of FEMA, 1999 with the Adjudicating Authority.

The agency alleges that the involved companies have breached Section 6(3)(b) of FEMA and the Consolidated FDI Policy guidelines, amounting to Rs 1,654.35 crore.