New Delhi, July 23: The Enforcement Directorate (ED) on Wednesday said that it has initiated a case under the Foreign Exchange Management Act (FEMA) against Flipkart-backed fashion e-commerce platform Myntra and its associated companies and directors, citing alleged FDI violations amounting to ₹1,654 crore.

The Bengaluru zonal office of the ED filed the complaint under Section 16(3) of FEMA after receiving credible information that Myntra Designs Private Limited and related entities were involved in multi-brand retail trade under the guise of “wholesale cash and carry” business, which is in violation of prevailing FDI norms.

According to ED’s findings, Myntra received ₹1,654 crore in foreign direct investment by declaring itself as a wholesale trader. However, it allegedly made 100% of its sales to Vector E-Commerce Pvt. Ltd., a related party that then retailed the goods to consumers, effectively turning the operation into a business-to-customer (B2C) model — something prohibited under India’s FDI policy for inventory-based e-commerce.

The ED stated that this arrangement was a deliberate structuring to bypass restrictions and bifurcate B2C transactions as B2B (business-to-business) between related firms and then B2C from Vector to retail customers. The FEMA regulations, specifically amendments dated April 1, 2010, and October 1, 2010, allow only up to 25% sales to group companies, a condition Myntra allegedly failed to comply with.

The agency emphasized that this model contravenes Section 6(3)(b) of FEMA and the consolidated FDI policies of the relevant periods. India’s current FDI rules prohibit foreign investment in inventory-based e-commerce and permit it only in marketplace models.

In response, a Myntra spokesperson said the company remains committed to legal compliance and high standards of integrity. “We have not received a copy of the complaint or supporting documents, but we are fully committed to cooperating with authorities,” the company stated.

Myntra, founded in 2007 and now owned by Walmart through Flipkart, has grown into one of India’s largest online fashion platforms with over 70 million monthly active users and a catalogue of nearly 4 million styles across 9,700+ brands.

Reiterating its commitment to India’s growth, Myntra said it supports artisans, weavers, and local brands, helping bring traditional Indian craftsmanship to a global audience while creating large-scale employment and digital entrepreneurship across the country.