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A multi-million dollar lawsuit is haunting Walmart's Indian arm.
Indian financial authorities have opened an investigation into Myntra, Walmart's fashion platform, in a case estimated at approximately $200 million, amid allegations of violating foreign investment rules.
India's law enforcement agency has accused Bengaluru-based Myntra of circumventing the Foreign Exchange Management Act (FEMA) by passing off retail sales as wholesale through a subsidiary called Vector E-Commerce.
According to the agency, Myntra used this entity as a front to conduct multi-brand retail sales, a violation of laws that prohibit foreign companies from selling products directly to consumers to protect local retailers.
The law also imposes strict limits on the volume of transactions between related entities, not exceeding 25% of total sales, according to a report published by TechCrunch and reviewed by Al Arabiya Business.
In an official statement, the authority explained that Myntra did not comply with any of the conditions for operating as a wholesale company, as nearly all of its sales were made to its subsidiary, Vector.
The case is part of a broader campaign led by New Delhi for years against e-commerce giants, including Amazon and Flipkart – the latter of which acquired Myntra in 2014 before being subsequently purchased by Walmart in a massive $1.6 billion deal in 2018.
Through these steps, the Indian government seeks to impose strict oversight on the activities of these companies, at a time when US pressure is mounting on New Delhi to allow Amazon and Walmart full access to India's e-commerce market, estimated at $125 billion.
Myntra, however, denied any knowledge of the complaint or receipt of any official documents, but affirmed its full commitment to cooperating with the relevant authorities.
At Myntra, we adhere to the highest standards of legal compliance and integrity in all our operations.
Myntra, which controls nearly half of India's online fashion market, is currently expanding its operations in high-growth sectors such as home and beauty, in addition to exploring social commerce by partnering with influencers and celebrities on platforms like Instagram and YouTube.
As India continues to tighten its grip on foreign technology companies, this case serves as a stark warning to digital giants about the new rules of the game in one of the world's fastest-growing markets.
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