India’s financial crime watchdog has filed a complaint against Walmart-backed fashion e-commerce giant Myntra, alleging the company violated foreign investment rules by channeling over $191 million through a related-party scheme that disguised retail operations as wholesale trade.
This complaint marks the latest move in a broader crackdown by Indian authorities, which previously targeted Amazon and Flipkart. On Wednesday, the Enforcement Directorate stated that the Bengaluru-based fashion e-commerce firm violated the Foreign Exchange Management Act (FEMA) by engaging in multi-brand retail trading under the guise of wholesale cash-and-carry operations. The agency accused Myntra of using a related entity, Vector E-Commerce, as an intermediary to route retail sales through a wholesale structure.
India restricts foreign companies engaged in wholesale business from making direct sales to consumers to protect local retailers. The law also limits sales to related group companies to a maximum of 25%. According to the agency, Myntra failed to meet the conditions for operating as a wholesale business, as all its sales were made exclusively to Vector E-Commerce.
The Enforcement Directorate filed the complaint against Myntra, its related companies, and their directors under Section 16(3) of FEMA, 1999. Myntra controls around half of India’s fashion e-commerce market. The company is gradually expanding its quick commerce service and broadening its reach in high-growth categories like home and living, as well as beauty. It is also testing social commerce by partnering with celebrities and onboarding micro-influencers, competing with platforms like Instagram, YouTube, and Amazon’s Live.
The complaint comes as Indian officials hold talks with the Trump administration over a potential trade deal with the United States. The Modi government is reportedly under pressure to grant Amazon and Walmart-owned Flipkart full access to India’s $125 billion e-commerce market. While the government has long been expected to release its e-commerce policy, sources indicate it has been delayed to avoid straining relations with the U.S.
Amazon and Flipkart have previously faced investigations by Indian agencies, including the Enforcement Directorate. In November, the agency raided the offices of some of their sellers accused of violating foreign investment rules. In April, the agency also privately sought sales data from smartphone vendors like Apple and Xiaomi as part of its probe into Amazon and Flipkart.
Myntra responded by stating it had not yet received a copy of the complaint but remained fully committed to cooperating with authorities. A company spokesperson said, “At Myntra, we are deeply committed to upholding all applicable laws of the land and operating with the highest standards of compliance and integrity.”
Founded in 2007, Myntra was acquired by Flipkart in 2014 and later became part of Walmart when the U.S. retailer bought Flipkart for $1.6 billion in 2018. When contacted, a Walmart spokesperson referred to Myntra’s statement.