Govt eases FDI norms for export-focused e-commerce entities
New Delhi, July 23
The government has amended the foreign direct investment policy to allow FDI in the inventory-based model of e-commerce exclusively for exports of goods manufactured or produced in India, in a move aimed at boosting exports through e-commerce.
The Department for Promotion of Industry and Internal Trade (DPIIT) said the existing FDI policy has been reviewed to facilitate greater exports by Indian sellers.
The department noted that under the current policy, "FDI is permitted in Business to Business (B2B) e-commerce and marketplace model of e-commerce. However, FDI is not permitted in Business to Consumer (B2C) e-commerce and inventory-based model of e-commerce where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly."
Announcing the policy change, DPIIT said, "In order to facilitate greater exports through easier and increased access of global markets by Indian sellers, the extant FDI Policy has been reviewed and it is decided that the restrictions on inventory-based model of e-commerce shall not apply in case of exports of domestically manufactured and/or produced goods/products."
Under the revised policy, a new provision has been inserted allowing an e-commerce entity to engage in the inventory-based model only for exports.
The new provision states, "An e-commerce entity is permitted to engage in inventory-based model of e-commerce exclusively for the export of goods/products manufactured and/or produced in India" in accordance with the Foreign Trade Policy 2023, the Handbook of Procedures, and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, as amended from time to time.
It further clarifies that "the restrictions on B2C and the inventory-based model of e-commerce... shall not apply to the export of goods/products through e-commerce" under the newly inserted provision.
DPIIT said the decision will come into effect from the date of notification under the Foreign Exchange Management Act (FEMA).
— ANI
Reader Comments
Finally, some clarity! As a weaver from Varanasi, this could be a game-changer for our handloom exports. But why only for goods manufactured in India? What about services? Also, the compliance costs for small sellers to meet export regulations are huge. Need some support for MSMEs to actually benefit from this. 🧵🇮🇳
Interesting policy shift. I work with Indian exporters in the US, and many have been confused about FDI rules for e-commerce. This should streamline things. However, I'm curious how they'll prevent companies from using this as a loophole to bypass the inventory-based model ban domestically. Strong monitoring is essential.
Good step, but the government needs to walk the talk. We've seen so many policy announcements that never translate into ground-level action. What about logistics infrastructure? Customs clearance delays? And foreign exchange regulations that kill small exporters? This FDI easing is just one piece of a very large puzzle. Still, better than nothing. 👏
This is exactly what Indian startups needed! My friend runs an organic food export business and she's been struggling with the old norms where she couldn't own inventory. Now she can actually stock products and ship them globally. But I worry about big foreign players like Amazon using this to enter B2C through the back door. The devil is in the details, as always. 🙏
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