The restrictions on foreign investment in inventory-based ecommerce will “not apply in case of exports of domestically manufactured and/or produced goods/products,” the Department for Promotion of Industry and Internal Trade (DPIIT) said in a Press Note.
The government has been considering this since last year in a broader effort to boost India’s exports without impacting the businesses of small retailers, people aware of the matter said.
The proposal was initially mooted by the Directorate General of Foreign Trade (DGFT) as it was aimed at boosting India’s exports through the ecommerce medium.
“The DGFT will come out with details and safeguards around the new policy in a few weeks and it could take another 4-5 months to get operational,” an official said.
New Channel for Sellers
At present, FDI is permitted in business-to-business (B2B) ecommerce and the marketplace model but not in businessto-consumer (B2C) ecommerce and inventory-based model where inventory of goods and services is owned by an ecommerce entity and is sold to consumers directly. The move would create a new channel for Indian sellers to access global markets.
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“I don’t see this having any meaningful impact on the domestic ecommerce landscape because the relaxation is exclusively for exports,” said a senior ecommerce industry executive who requested not to be identified. “Where it could make a difference is in creating an additional channel for Indian-made products to reach global consumers.”
Ecommerce giant Amazon welcomed the policy decision, saying it “empowers tier-2 and tier-3 manufacturers to go global” as the country targets $80-billion cumulative exports by 2030. “This enabling amendment unlocks opportunities for regional manufacturers and SMEs, allowing us to better serve seller partners and contribute meaningfully to India’s export-led growth strategy,” an Amazon spokesperson said.
The Centre had formed a working group comprising industry and government stakeholders to deliberate on the proposed ecommerce export inventory model amid the 50% tariffs imposed by the US in August 2025.
The discussions aimed at finding new ways to grow exports and temper the impact of the steep tariffs on small exporters, besides evaluating existing FDI restrictions, need for explicit carve-outs, strict separation of export and domestic inventory, and the roadmap for a pilot programme.
The upcoming guardrails could be around demarcation, mechanism for export entities to claim goods and services tax refunds and duty remissions, besides establishing safeguards to prevent misuse of seller-level data.
The official cited above said though discussions took place at the cabinet level, the decision didn’t require the approval of the Union Cabinet.
SMES MAY BENEFIT
Around 70% of India’s small and medium enterprises (SMEs) actively leveraging ecommerce platforms in segments such as fashion and apparel, gems and jewellery, home and living, organic wellness, beauty and handcrafted lifestyle products are expected to be the biggest beneficiaries of this easing. India’s goods exports rose 15.5% on-year to $40.41 billion in June. Merchandise exports during April-June FY27 were $129.32 billion. The country’s ecommerce exports are estimated at $4-5 billion annually.
Terming the decision a “positive step for India’s export ecosystem and domestic manufacturers,” a second senior ecommerce executive said companies like Flipkart, Amazon India and Meesho will continue to operate under the existing domestic policy as it doesn’t change the domestic marketplace framework.