Explained: Why Myntra Is Under ED Radar? The Full Story Behind Rs 1,654 Cr FDI Probe

Myntra vs ED: The Enforcement Directorate (ED), which investigates economic crimes in India, has filed a complaint against Myntra Designs Private Limited and its related companies.

The charge? They allegedly broke rules about how foreign investment should be used in India’s e-commerce sector. Here’s a simple breakdown of the case and what it means.

What is the Case About?

The ED has accused Myntra of receiving more than Rs 1,654 crore in foreign investment for a business model that isn’t allowed under India’s FDI rules. This money was supposed to be used for a permitted business—wholesale trading. Instead, ED says Myntra used this money for retail activities, which are restricted for companies with foreign funding.

The complaint has been registered under the Foreign Exchange Management Act (FEMA), 1999. The ED filed the case with the Adjudicating Authority, a body that looks into such violations.

What Did Myntra Do Wrong?

Myntra claimed to be doing "wholesale cash and carry" business—where they sell in bulk to other businesses—which is allowed to receive foreign direct investment (FDI). But the ED investigation found that Myntra was mostly selling products to its own related company, Vector E-Commerce Pvt. Ltd.

Vector, in turn, sold those products directly to customers online—just like a regular retail shop would. This means that instead of wholesale trading, Myntra was indirectly selling to individual consumers by using Vector as a middleman.

Also Read: Myntra Breaks Silence on ED Probe: ‘No Official Complaint Received Yet'

How Did the Companies Try to Hide It?

Myntra and Vector E-Commerce are part of the same group of companies. The ED believes they tried to hide their retail business by splitting the company into two parts: 1) Myntra would sell in bulk to Vector. 2) Vector would then sell the same goods to customers.

By doing this, they tried to make it look like a business-to-business (B2B) model—but in reality, it was business-to-consumer (B2C), which is not allowed with that level of foreign funding under Indian rules.

Why Is This a Violation of FDI Policy?

According to the FDI rules in place since 2010, a wholesale company that has foreign investment can only sell up to 25% of its total products to related companies from the same group. This rule is meant to prevent backdoor entry into retail trading, which has strict conditions.

In Myntra's case, most of the sales went to Vector—clearly more than 25%. Because of this, the ED says the company broke the rules and violated FEMA provisions.

What did company say?

E-commerce major Myntra has issued its official response after coming under the Enforcement Directorate’s (ED) scanner.

The company said, “At Myntra, we are deeply committed to upholding all applicable laws of the land and operating with the highest standards of compliance and integrity. As a homegrown marketplace, we are committed to contributing to India’s nation-building efforts by empowering the textile and apparel ecosystem through digital commerce,” Myntra’s spokesperson added.

“While we have not received a copy of the subject complaint and the supporting documents from the authorities, we remain fully committed to cooperating with them at any point in time,” the statement read.

What Happens Next?

The ED has filed a legal complaint under section 16(3) of FEMA. The case will now be heard by the Adjudicating Authority, which will decide if Myntra and its related parties are guilty of these alleged violations. If found guilty, penalties could follow, including heavy fines and restrictions on future FDI for the company.