The Directorate of Enforcement (ED)has announced an investigation against Myntra Designs Private Limited and its associated companies for alleged violations of the Foreign Exchange Management Act (FEMA) involving ₹1,654 crore. The probe claims that Myntra engaged in multi-brand retail trading disguised as wholesale cash and violating India’s foreign direct investment (FDI) policies that regulate retail operations.

According to the ED, Myntra declared its business as wholesale cash and carry and received FDI funds based on this classification. However, it sold goods to Vector E-commerce Pvt. Limited, a related company that then retailed these goods directly to customers. This arrangement effectively split direct business-to-customer sales into business-to-business and then business-to-customer transactions between group companies, contravening FDI policy limits that allow only up to 25% sales to related entities under wholesale trading rules.

Myntra responded by confirming its commitment to comply with all laws and expressed willingness to cooperate with authorities, though it noted it had not yet received official complaint documents. In a separate but related case, the ED also booked One Sigma Technologies Pvt. Ltd. (SIMPL), known for its Buy Now Pay Later app, for alleged FEMA violations involving ₹913.75 crore through unauthorized foreign investments from the US. These developments highlight increased regulatory scrutiny on e-commerce firms concerning their compliance with India’s foreign investment rules and operational structures.

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