New Delhi [India], July 23 (HBTV): The Enforcement Directorate (ED) has filed a complaint under the Foreign Exchange Management Act, 1999 (FEMA) against Myntra Designs Private Limited, its related entities, and their directors for alleged foreign direct investment (FDI) violations amounting to INR 1,654.35 crore, the agency said on Wednesday.
The complaint was filed by the Bengaluru Zonal Office of the ED based on credible information that Myntra and its associated companies were engaged in Multi-Brand Retail Trade (MBRT) under the guise of ‘wholesale cash and carry’, allegedly in violation of existing FDI policy.
According to the ED, its investigation under FEMA revealed that Myntra Designs Pvt Ltd declared itself to be in the wholesale cash and carry business and received FDI from foreign investors amounting to INR 1,654.35 crore. The company allegedly sold the majority of its goods to Vector E-Commerce Pvt Ltd, which then retailed the products to end customers.
The agency noted that Myntra Designs Pvt Ltd and Vector E-Commerce Pvt Ltd are related parties and part of the same corporate group. It added that Vector E-Commerce Pvt Ltd was created and used as a conduit to split the retail transactions—first as a business-to-business (B2B) transaction between Myntra and Vector, and subsequently as a business-to-customer (B2C) transaction between Vector and retail consumers.
The investigation further stated that Myntra was, in effect, conducting multi-brand retail trade under the façade of wholesale operations. The ED observed that Myntra failed to comply with the conditions of wholesale trading, specifically the clause that allows only up to 25 per cent of sales to companies within the same group. Myntra reportedly made 100 per cent of its sales to Vector E-Commerce Pvt Ltd.
Citing contraventions under Section 6(3)(b) of FEMA, 1999, and violations of the Consolidated FDI Policies dated April 1, 2010, and October 1, 2010, the ED has filed a formal complaint involving a total amount of INR 1,654.35 crore.
(ANI)