The Enforcement Directorate (ED) has initiated a case under the Foreign Exchange Management Act (FEMA) against Myntra Designs Pvt Ltd, its group entities, and directors for alleged FDI violations totaling ₹1,654.35 crore . The agency suspects that Myntra, backed by Flipkart, misrepresented a multi-brand retail (B2C) operation as a wholesale cash‑and‑carry (B2B) model to circumvent foreign investment rules .

According to FEMA regulations, wholesale entities can only sell up to 25% of goods to affiliated companies. ED’s findings suggest that Myntra sold 100% of its inventory to Vector E‑Commerce Pvt Ltd, an internal affiliate, which then retailed directly to end consumers—effectively masking true business operations .

The Bengaluru Zonal Office of the ED filed the case under Section 16(3)(b) of FEMA, 1999, based on “credible information” about the alleged violations . While Myntra has not officially responded yet, this probe follows a wider enforcement focus on tech firms' compliance with foreign investment norms.

This development places Myntra under intense regulatory scrutiny and could influence future FDI policy interpretations in multi-brand retail via affiliate entities.