ED Files FEMA Complaint Against Myntra for FDI Violation

India’s Enforcement Directorate (ED) has filed a formal complaint against Myntra, a leading fashion ecommerce platform owned by Walmart, for allegedly violating the Foreign Exchange Management Act (FEMA).

The ED claims that Myntra routed over $191 million through related-party entities to falsely present its retail business as wholesale trade, a potential breach of foreign direct investment (FDI) regulations. At the center of the complaint is Vector E-Commerce, Myntra’s related entity, through which the platform allegedly conducted all its sales, surpassing the 25 percent transaction limit permitted for group companies under India's wholesale trade policy.

Key Highlights

• ED alleges Myntra violated FEMA by routing $191M via related entities
• Complaint cites excessive sales to group firms breaching FDI limits
• Myntra says it hasn't received the complaint but will cooperate fully

According to Indian law, foreign-funded wholesale businesses are prohibited from selling directly to consumers, a measure designed to protect local brick-and-mortar retailers from unfair competition.

The complaint, filed under Section 16(3) of FEMA, names Myntra, its associated firms, and company directors. This move follows increasing regulatory scrutiny on foreign ecommerce firms operating in India through complex legal structures to bypass FDI caps.

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The case is likely to reignite debates around FDI policy in ecommerce, especially concerning operations of global players like Walmart, Amazon, and others in India’s tightly regulated retail sector.