ED files FEMA case against Myntra, directors for over ₹1,654-crore FDI violation

The Enforcement Directorate (ED) on Wednesday, July 23, said it has registered a Foreign Exchange Management Act (FEMA) case against e-commerce platform Myntra, linked companies and directors for foreign direct investment (FDI) "contravention" of over ₹1,654 crore.

"ED investigation under the provisions of FEMA, 1999, revealed that M/s. Myntra Designs Pvt. Ltd. had declared that they were engaged in the business of wholesale cash & carry and invited and received FDI from foreign investors equivalent to Rs 1654,35,08,981/- and that they sold majority of their goods to M/s. Vector E-Commerce Pvt. Ltd. (who sold the goods in retail to the ultimate customer)," ED said in a release dated July 23.

The complaint has been filed under Section 16(3) of the Foreign Exchange Management Act after the agency received "credible information" that Flipkart-backed Myntra Designs Private Limited, whose brand name is Myntra, and its related companies are doing multi-brand retail trade (MBRT) while claiming to be engaged in the "wholesale cash and carry" business.

This is in alleged violation of extant Foreign Direct Investment (FDI) guidelines, the ED said. The case has been registered against Myntra, its linked companies and its directors.

"ED investigation also revealed that Myntra Designs Pvt. Ltd. was actually carrying out multi-brand retail trading in the guise of wholesale cash & carry," the release stated.

ED added, "Myntra Designs Pvt. Ltd. and others have contravened the provisions as per section 6(3)(b) of the Foreign Exchange Management Act, 1999 and Consolidated FDI Policy dated 01.04.2010 and Consolidated FDI Policy dated 01.10.2010 to the tune of Rs. 1654,35,08,981/-."