- with readers working within the Pharmaceuticals & BioTech and Law Firm industries
- within Litigation, Mediation & Arbitration, Intellectual Property, Food, Drugs, Healthcare and Life Sciences topic(s)
The Department for Promotion of Industry and Internal Trade (“DPIIT”) has issued Press Note No. 3 (2026 Series) introducing a significant relaxation to India’s Foreign Direct Investment Policy (“FDI Policy”) for the e-commerce sector. The amendment is aimed at promoting exports by allowing foreign funded e-commerce entities to adopt an inventory-based model for exports of multi-brand goods manufactured or produced in India.
Existing Position
Under India’s FDI Policy, foreign investment in e-commerce has always been a study of “yes” and “no”: yes, to the marketplace model (where the platform connects buyers and sellers), and no to the inventory-based model (where the e-commerce entity owns the stock and sells it directly to consumers). This “no” was meant to protect small domestic retailers from being undercut by well-funded foreign platforms.
Key Change Introduced
The Press Note inserts Paragraph 5.2.15.2.5 into the Consolidated FDI Policy, creating a carve out for exports. Under the revised framework, an e-commerce entity with foreign investment may engage in an inventory-based model exclusively for the export of goods that are manufactured or produced in India. This essentially means that an e-commerce entity can now hold and own its own inventory for the purposes of exporting such good via its e-commerce platform. Such export should comply with the applicable provisions of the Foreign Trade Policy, 2023, the Handbook of Procedures and the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, as amended from time to time. Therefore, the restrictions applicable to inventory-based and B2C e-commerce models will not apply to such export transactions.
What this Means for Businesses
This amendment is intended to strengthen India’s export ecosystem and also earn valuable foreign exchange for India by enabling foreign-invested e-commerce marketplaces to now build proper export supply chains out of India by sourcing, warehousing and shipping Indian-made goods abroad under their own inventory. Businesses especially from Tier-II/III cities get a shot at plugging into the logistics and global reach of large platforms without needing to build export capability themselves. However, B2C sales to Indian customers by foreign-funded inventory-led platforms remain prohibited so the protections for local retailers stay intact.
Our Comments
The amendment marks a shift in India’s FDI policy by carving out a targeted exception for export-oriented e-commerce while continuing to safeguard the existing restrictions applicable to domestic B2C e-commerce. By permitting foreign funded e-commerce entities to operate an inventory-based model exclusively for exports, the Government has sought to facilitate greater integration of Indian manufacturers into global supply chains and enhance the country’s export competitiveness.
From a business perspective, the relaxation is likely to benefit foreign e-commerce platforms, export-focused businesses and Indian manufacturers by enabling more efficient sourcing, warehousing and cross-border distribution of goods manufactured in India. However, entities will now need clear segregation between export inventory and any domestic operations to avoid intermixing.
Finally, this is a targeted export-only liberalisation and entities wanting to expand their operations should wait till the official FEMA notification amending the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, in this regard.
LexCounsel provides this e-update on a complimentary basis solely for informational purposes. It is not intended to constitute, and should not be taken as, legal advice, or a communication intended to solicit or establish any attorney-client relationship between LexCounsel and the reader(s). LexCounsel shall not have any obligations or liabilities towards any acts or omission of any reader(s) consequent to any information contained in this e-newsletter. The readers are advised to consult competent professionals in their own judgment before acting on the basis of any information provided hereby.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
