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Myntra, one of India’s top fashion e-commerce platforms, is under the scanner of the Enforcement Directorate (ED) for allegedly violating the country’s foreign investment regulations. The central agency has issued a notice under the Foreign Exchange Management Act (FEMA), seeking to explain foreign investments worth ₹1,654.35 crore.
According to the ED, Myntra received the foreign investment by positioning itself as a “wholesale cash-and-carry” business, but in practice, it routed a significant portion of its inventory to Vector E-Commerce Pvt Ltd — a related entity — which then sold goods directly to consumers. The agency claims this structure circumvents India’s foreign direct investment (FDI) rules, which prohibit foreign-owned entities from engaging in direct retail sales to protect domestic businesses.
Myntra, which is owned by Walmart-backed Flipkart, has said it has not yet received any official communication regarding the notice. In a statement, a company spokesperson affirmed Myntra’s commitment to cooperating fully with authorities, stating, “At Myntra, we are deeply committed to upholding all applicable laws of the land and operating with the highest standards of compliance and integrity.”
Founded in 2007 and acquired by Flipkart in 2014, Bengaluru-based Myntra currently dominates India’s online fashion segment, controlling nearly 50% of the market. In recent years, the platform has expanded into quick commerce and social commerce, collaborating with influencers on platforms like Instagram and YouTube.
The Confederation of All India Traders (CAIT), a vocal critic of foreign-owned e-commerce firms, reiterated its stance that companies like Myntra have long been flouting FDI norms. The group called on the government to crack down on alleged predatory pricing and deep discounting tactics used by such players.
This isn’t the first time a major e-commerce player has come under regulatory scrutiny in India. In 2023, Amazon and Flipkart faced antitrust allegations for favoring select sellers and restricting product availability in partnership with smartphone manufacturers. Meanwhile, food delivery giants Zomato and Swiggy have also been probed for giving preferential treatment to specific restaurant partners.
Separately, Flipkart is already dealing with its own FEMA notice, with the ED questioning the company over a possible ₹11,656 crore violation related to foreign investment rules.
(Source: Reuters)
