RBI ends FEMA probe against Myntra; ED closes investigation

The Reserve Bank of India (RBI) has issued a compounding order in the case of M/s Myntra Designs Private Limited. With this, an investigation into alleged violations of the Foreign Exchange Management Act (FEMA), 1999, was completed against the company, according to an official statement.

The RBI passed a compounding order on April 20, 2026, under Section 15 of FEMA after receiving a "No Objection" from the agency. The order resulted in the termination of the investigation against the company for the alleged contraventions, the Enforcement Directorate said.

In this case, based on the credible information received, an investigation was taken up by ED for the following contraventions of FEMA, 1999, for which compounding has been done by RBI.

1. Delay in submitting APRs under Regulation 15(iii) of FEM (Transfer or Issue of Any Foreign Security) Regulations, 2004, covering Rs 42.85 Crore.

2. Undertaking financial commitment by way of ODI pending submission of APRs under Regulation 6(2) (iv) of FEMA 120/RB-2004, covering Rs 3.03 crore.

The case was under investigation while the company filed an application before the RBI for compounding of the said contraventions under FEMA as per the provisions of Section 15 of the Act. On reference from RBI, the ED issued no objection for such compounding in line with the true spirit of the Act. Accordingly, the RBI, on the basis of no objection issued by ED, has compounded the said contraventions vide compounding order on April 20, 2026, with a one-time payment of Rs 2,88,000.

What was the case?

The ED on July 23, 2025, registered a case against Myntra Designs Private Limited, its related entities, and their directors under Section 16(3) of the Foreign Exchange Management Act (FEMA), 1999. According to the agency, the e-commerce company received Rs 1,654.35 crore in foreign direct investment (FDI) by mischaracterising multi-brand retail operations as “wholesale cash & carry” trade. The FDI regulation, which limits foreign investment in MBRT under specific circumstances, is directly violated by this claimed misrepresentation.

ED also said that Myntra sold around its 100 per cent of its inventory to a related entity, Vector E‑Commerce Pvt Ltd, before it reached consumers, contravening FDI policy amendments that cap intra-group wholesale sales at 25 per cent.