India’s top fashion e-commerce brand Myntra is now under the spotlight. The Enforcement Directorate (ED) has accused the company of breaking India’s strict FDI (Foreign Direct Investment) rules.
At the center of the storm is a huge ₹1,654 crore. The ED believes this money came from foreign investment and was used wrongly in multi-brand retail trade (MBRT).
But here’s the twist — Myntra was not supposed to do retail. It had taken permission for wholesale trading only. Wholesale means selling in bulk to other businesses, not directly to customers.
According to the ED, Myntra did not follow this rule. Instead, it sold products straight to regular customers, just like a normal online shop. This, the agency says, breaks India’s FDI policy.
How Did Myntra Do It?
The ED says that Myntra used a company named Vector E-Commerce Pvt. Ltd. to hide its retail activities.
Here’s how it worked:
- Myntra would first sell products to Vector.
- Then Vector would sell those same products directly to consumers.
- On paper, this looked like a B2B (business-to-business) sale.
- But in reality, it was B2C (business-to-customer).
ED claims this was a smart trick to hide retail activity and avoid India’s FDI rules on multi-brand retail.
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Why Is This a Big Deal?
India has very tight control over foreign money in retail. Multi-brand retail, like supermarkets or big online stores, can’t take foreign money easily. They must follow many rules and get special approval.
Myntra’s move, according to ED, goes against these rules. It gave the impression of running a wholesale business, while actually doing full-scale retail using foreign funds.
What Happens Now?
The ED has officially filed a case. Myntra will now have to explain its actions. If proven guilty, the company may face heavy penalties and stricter scrutiny.
This case also raises questions about how other e-commerce companies operate in India. Many of them use similar business models, and now, they could also come under investigation.
This is not just about Myntra. It’s about how foreign money flows into India’s retail market. If ED’s claims are true, it shows a clear misuse of loopholes in the system.
For now, Myntra’s image has taken a hit. The company may need to make major changes to how it operates if it wants to stay clean under Indian law.
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