India's financial crime watchdog has filed a complaint against Myntra, alleging violations of foreign investment rules related to masking retail operations as wholesale trade. The Enforcement Directorate claims Myntra funneled over $191 million through a related entity, Vector E-Commerce, in a way that infringed the Foreign Exchange Management Act. Foreign companies are restricted in direct sales to consumers to protect local retailers. Myntra, holding a significant share of the fashion e-commerce market, is also expanding its services into new categories and exploring social commerce opportunities.
Myntra has been accused of violating foreign investment rules by channeling over $191 million through a related-party scheme that disguised retail operations as wholesale trade.
The Enforcement Directorate stated that Myntra engaged in multi-brand retail trading under the guise of wholesale cash and carry, violating the Foreign Exchange Management Act.
Under Indian law, foreign companies engaged in wholesale business are restricted from making direct sales to consumers to protect local retailers.
Myntra controls around half of India's overall fashion e-commerce market and is expanding into quick commerce and social commerce.
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