Walmart's Myntra Under Probe in India Over Foreign Investment Violations

India's federal crime agency has launched an investigation into Walmart's (WMT, Financials) fashion e-commerce unit Myntra for allegedly violating foreign investment regulations by selling directly to consumers, Reuters reported Wednesday.

According to the Enforcement Directorate, Myntra received nearly $192 million from unnamed foreign investors. The agency alleges that although Myntra is registered as a wholesale entity, it sold most of its products to a retailer it owns which in turn listed the items for sale on Myntra's own website.

Indian law permits foreign-funded e-commerce firms to operate only as neutral marketplaces connecting buyers and sellers. They are prohibited from stocking inventory or selling directly to customers. Walmart's Flipkart and Amazon (AMZN, Financials) have previously faced similar allegations, which both firms have denied.

Myntra, founded in 2007 and based in Bengaluru, last reported annual revenue of $599 million, according to data from Tofler. As of Wednesday, neither Myntra nor Walmart has issued a formal response to the probe.

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