After Flipkart, Now Myntra: Why ED Is Cracking Down Hard on E-Commerce Giants

After questioning Flipkart, the Enforcement Directorate (ED) is now examining Myntra over possible violations of India’s foreign exchange rules. The move signals wider scrutiny of e-commerce platforms backed by foreign funding.

What is the ED probing?

The Enforcement Directorate (ED) is investigating whether Myntra’s business model violates the Foreign Exchange Management Act (FEMA) by exerting indirect control over select sellers—a practice that is not allowed under India’s foreign direct investment (FDI) rules.

The ED has filed a formal complaint under Section 16(3) of the Foreign Exchange Management Act (FEMA), 1999, against Myntra Designs Private Limited, its associated companies, and directors, for alleged violations amounting to Rs 1,654.35 crore.  

Why is the reason behind the crackdown?

According to current policy, online marketplaces like Flipkart and Myntra must act only as intermediaries. These e-commerce firms are not allowed to own inventory or control which sellers thrive on their platforms. However, authorities believe that some sellers may be given unfair advantages through backend ties, exclusive deals, or foreign funding, which would breach these norms.

Also Read: ED Files Rs 1,645 Crore FEMA Violation Complaint Against Myntra and Directors: What You Need to Know | Republic World

What is the burning issue

A key concern is deep discounting strategies by these e-commerce firms. Regulators suspect that big e-commerce players may be indirectly offering discounts through selected sellers — a move that could hurt offline businesses and distort competition.

What are the companies take?

Earlier, Flipkart was asked to explain similar practices. Now Myntra, which it owns, faces the same questions.

What is ED's objective?

The ED’s focus is part of a broader attempt to tighten oversight of digital commerce and ensure fair play between global giants and smaller domestic players. The outcome could lead to changes in how discounts are offered and how sellers are chosen. With foreign investment continuing to fuel India’s online shopping boom, the coming months may prove crucial in shaping how this fast-growing sector is regulated.