India’s Enforcement Directorate (ED) has taken formal action against Myntra, accusing the Walmart-backed fashion e-commerce platform of flouting foreign investment norms by rerouting over $191 million through a related-party setup designed to mask retail activity as wholesale trade.
The ED alleges that Myntra sidestepped rules under the Foreign Exchange Management Act (FEMA) by operating a multi-brand retail business under the pretense of being a wholesale player. At the center of the controversy is Vector E-Commerce, a related entity that reportedly acted as a front to help Myntra conduct direct-to-consumer sales—something foreign-funded wholesale businesses in India are not permitted to do.
As per Indian law, wholesale ventures with foreign investment are prohibited from selling directly to consumers and can only sell up to 25% of their goods to affiliated firms. According to the ED, Myntra failed on both counts. It routed all of its business exclusively through Vector, essentially using it as a shell to bypass restrictions.
The agency has filed a formal complaint under Section 16(3) of FEMA, 1999, naming Myntra, its associate companies, and several directors as part of the investigation.
This isn’t an isolated case. The complaint adds Myntra to a growing list of global e-commerce players under the scanner. Amazon and Flipkart have previously faced similar scrutiny as Indian regulators intensify oversight in the fast-evolving online retail sector.
Despite the legal troubles, Myntra remains a dominant force in India’s online fashion market, reportedly accounting for nearly 50% of the space. The company has also been steadily pushing into new verticals—like home décor, beauty, and quick commerce—and is experimenting with influencer-led social commerce campaigns, entering a battleground already occupied by Instagram, YouTube, and Amazon Live.
