look news india
Myntra ed action on fema violation: The Enforcement Directorate (ED) has taken major action under the Foreign Exchange Management Act (FEMA), 1999 against the Flipkart-backed e-commerce platform Myntra, its associate companies and directors. The ED has registered a case of violation of foreign investment (FDI) rules of Rs 1654.35 crore against Myntra Designs Private Limited. The case has been registered under Section 16 (3) of FEMA, in which Myntra and its associate companies are accused of incorrectly introducing multi-brand retail trading as wholesale cash and carry businesses.
What is the whole matter?
The Bangalore Regional Office of ED has taken this action based on reliable information. Investigations have revealed that Mantra had taken foreign investment of more than Rs 1654.35 crore in the name of wholesale trade. However, in fact, Mantra sold all her product vector to e-commerce private limited, which is a company in the same group. The vector sold these products to the common consumers in retail, which is considered a B2C transaction. In this way, Mantra violated the FDI rules by showing B2B transactions.
According to FDI policy, a wholesale company can sell products to other companies in its group only 25%. But Mantra sold 100% products to the vector, which is a clear violation of FDI policies of Section 6 (3) (B) of FEMA and 1 April 2010 and 1 October 2010. The ED has filed a complaint before the judicial officer in this case.
What does Minantra say?
Walmart Ink -owned Mantra said that she has not yet received any complaints or documents from the ED. The company said in a statement, “We are fully prepared for cooperation and will cooperate with the authorities if needed.”
The investigation of the case is still going on, and the ED will determine the details of individual liabilities and potential punishment during further proceedings. The matter is part of the growing regulator investigation of e-commerce companies, especially foreign investment, in India, especially foreign investment.