The Enforcement Directorate (ED) has launched a ₹1,654 crore FEMA case against Myntra Designs Pvt Ltd and its related entities, alleging violations of foreign direct investment (FDI) norms.
Key Allegations:
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Myntra and associated companies are accused of engaging in multi-brand retail trading (MBRT) under the guise of "Wholesale Cash & Carry" operations.
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MBRT is not permitted under current FDI rules, and such a structure allegedly allowed them to bypass restrictions on direct-to-consumer retail, violating the Foreign Exchange Management Act (FEMA), 1999.
ED’s Findings:
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The Bengaluru Zonal Office received credible intelligence suggesting that the business structure was deliberately designed to circumvent FDI policy.
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The case names Myntra's directors and may lead to individual liability, pending further investigation.
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Details of potential penalties or prosecution will become clearer as the probe advances.
Context:
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This comes amid intensifying scrutiny of e-commerce companies with foreign funding.
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Regulators are increasingly cracking down on indirect retail models, where firms allegedly exploit loopholes to sell directly to consumers, despite policy restrictions.
Implications:
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If proven, this case could lead to heavy financial penalties, reputational damage, and tightened regulations on the broader e-commerce sector.
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It also sends a clear message about the government's intent to enforce FDI compliance strictly, especially in sensitive sectors like retail.
