Myntra Settles FEMA Violations Case With RBI

Fashion ecommerce major Myntra has settled a Foreign Exchange Management Act (FEMA) contraventions case with the RBI by paying a compounding fee of ₹2.88 Lakh, resulting in the closure of an ED investigation into the matter.

The RBI passed the compounding order on April 20, 2026, under Section 15 of FEMA after the ED issued a no-objection for compounding the violations.

The ED began investigation in the case based on credible information regarding FEMA contraventions by Myntra.

The violations pertained to a delay in filing Annual Performance Reports (APRs) for overseas investments involving ₹42.85 Cr and undertaking Overseas Direct Investment (ODI)-related financial commitments worth ₹3.03 Cr despite pending APR submissions.

During the course of the investigation, Myntra approached the RBI seeking compounding of the contraventions. Following a reference from the central bank, the ED granted its no objection for compounding, paving the way for the RBI to settle the matter through a one-time payment of ₹2.88 Lakh.

With the issuance of the compounding order, the FEMA proceedings against the company stand resolved and the investigation has been terminated.

Compounding is a mechanism under FEMA that enables entities to voluntarily settle specific contraventions by paying a prescribed penalty. 

The ED has increasingly promoted the use of this route as part of the government’s ease-of-doing-business initiative and to help reduce litigation.

Notably, in July 2025, the ED filed a complaint against Flipkart-owned Myntra, its related entities and directors for alleged violations of India’s FDI policy amounting to ₹1,654.4 Cr.

The probe agency alleged that Myntra was carrying out multi-brand retail trading (MBRT) under the guise of a wholesale cash-and-carry business, which normally allows 100% FDI under the automatic route.

According to the agency, Myntra received foreign investments and sold most of its goods to its related company, Vector E-Commerce, which then sold them to end consumers.

The ED further claimed that Vector was used to split transactions into business-to-business (B2B) and business-to-consumer (B2C) flows, effectively allowing retail operations while presenting the business as wholesale. It also alleged that Myntra violated FDI rules by exceeding the permitted 25% sales limit to group companies.

Based on these findings, the agency alleged violations of FEMA and India’s FDI policy amounting to ₹1,654.35 Cr.

Responding to the allegations at the time, Myntra said it remained committed to complying with all applicable laws and would cooperate fully with the authorities. The company also stated that it had not received a copy of the complaint or supporting documents from the ED.

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