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Myntra accused of FDI violation, FEMA breach
Myntra Accused Of FDI Violation And FEMA Breach, Follows Flipkart\'s Footsteps. Popular online retailer, Myntra, has followed Flipkart’s footsteps and come under the Enforcement Directorate’s (ED) radar for possible violation of foreign direct investment (FDI) norms in multi-brand retail.
Popular online retailer, Myntra, has followed Flipkart’s footsteps and come under the Enforcement Directorate’s (ED) radar for possible violation of foreign direct investment (FDI) norms in multi-brand retail.
A senior enforcement directorate official told Hindustan Times that the investigations were still on-going and that they suspected “there is a prima facie case of violation of FDI norms by Myntra”. He added that they would take a call on issuing a show-cause notice to the company once their probe was complete. The official did not elaborate upon the exact figure for the alleged Foreign Exchange Maintenance Act (FEMA) as the investigation was still on.
Denying the accusations, a Myntra spokesperson said, “We are in compliance with all government regulations pertaining to our business. We stand ready to fully and transparently cooperate with all government agencies.”
The FDI policy says that foreign investment is allowed in business-to-business ecommerce, but is prohibited in business-to-consumer ecommerce. According to this, multi-brand and single-brand retailers with FDI can’t sell online.
The government has initiated discussions on allowing FDI in business-to-consumer ecommerce. BJP, one of the highly possible parties to form the next government according to opinion polls, is opposed to FDI in multi-brand retail.
The ED is also examining Flipkart for a similar violation of foreign investment rules. There has been wide speculation that Flipkart and Myntra are in talks for a possible merger.
