Walmart’s Indian fashion arm Myntra is being investigated for allegedly breaching rules that ban foreign-funded wholesale retailers from selling directly to consumers, India’s federal crime-fighting agency said on Wednesday.
Myntra has raised nearly $192 million from foreign investors, the Enforcement Directorate said, without naming the investors.
The company, registered as a wholesale retailer, sold the majority of its products to a retailer it owned, which then sold the products on Myntra‘s website, the agency said.
Myntra and Walmart did not immediately respond to requests for comment.
India’s investment rules only allow foreign e-commerce companies to run a marketplace to connect buyers and sellers, and they cannot stock and sell goods to customers on their own.
Other companies, including Walmart’s Flipkart and Amazon, have often faced allegations of breaching such rules using certain sellers – allegations the companies have denied.
Founded in 2007, Bengaluru-based Myntra operates an online marketplace that specialises in fashion and lifestyle products. The company last reported an annual revenue of nearly $599 million, according to Tofler data.
Reuters
