Myntra in ED's Crosshairs: ₹1,654 Crore FEMA Case Filed Over FDI Norms

New Delhi (The Uttam Hindu): The Enforcement Directorate (ED) has registered a case against Myntra Designs Private Limited, a Flipkart-backed company, and its associated firms and directors under the Foreign Exchange Management Act (FEMA). The case involves alleged violations related to foreign direct investment (FDI) worth over ₹1,654 crore.

Alleged Violations

The ED alleges that Myntra and its related companies disguised their multi-brand retail trade as "wholesale cash and carry" business, violating India's FDI policy. The investigation found that Myntra raised FDI of ₹1,654 crore, claiming to operate in wholesale cash and carry, but most goods were sold to Vector E-Commerce Pvt. Ltd, a related company, which then sold products to retail customers.

Key Findings

1. Myntra's sales to Vector E-Commerce Pvt. Ltd, a group company, exceeded the allowed 25% limit, violating FDI conditions.

2. The company allegedly used a complex structure to bifurcate B2C transactions into B2B and B2C, violating FEMA rules.

3. The ED investigation revealed that Myntra was essentially doing multi-brand retail trading while calling it wholesale.

Next Steps

The ED has filed a formal complaint with the adjudicating authority under Section 16(3) of FEMA, alleging violations of FEMA rules involving ₹1,654 crore. The case will be further investigated and adjudicated upon by the authorities.