A condition mandating physical segregation of warehouse inventory is being evaluated, the official said.
Centre examining shields such as physical segregation, tracking in inventory-based etail
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The proposal being considered is part of the government’s plan to permit FDI in the inventory-based model of ecommerce solely for overseas markets, in a broader effort to boost India’s exports without impacting the businesses of small retailers.
“Technically, some physical segregation is required,” the official said. “Some conditions will be there because they can’t sell those goods to the domestic market. There will be guardrails,” he said, adding that the government has sought feedback from the industry on the plans.
A clear split between domestic and export operations is crucial for ensuring that products meant for exports aren’t pushed in the domestic market in circumvention of FDI rules.
India’s FDI policy currently bars overseas investments in the inventory-led ecommerce model. Full foreign ownership is only permitted in companies following the marketplace model.Also read: Ecommerce sees 25% growth in Q1 CY2026, says joint report by Flipkart, Bain & Co
Under the proposed ecommerce export model, a separate export entity in India, affiliated with the FDI-funded marketplace, would purchase products directly from Indian sellers for onward shipments to international customers based on pre-confirmed orders.
This entity will have to ensure end-to-end export order fulfilment including logistics, shipment and compliance processes. “Warehouses can be side by side,” the official said.
While the commerce and industry ministry had floated a note for seeking views from various central government departments late last year on the issue, the official said it is taking time as it involves many ministries.
Big Gain for SMEs
While the commerce and industry ministry had floated a note for seeking views from various central government departments late last year on the issue, the official said it is taking time as it involves many ministries.
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, and beauty, and handcrafted lifestyle products, are expected to be the biggest beneficiaries of this easing.
India, which has emerged as one of the fastest-growing ecommerce markets, is expected to reach $150 billion by 2026, per an EY-Assocham report. The country’s ecommerce exports are estimated at $4-5 billion annually.
The official said the commerce and industry ministry is also working on end-to-end tracking of goods—starting from product purchases from Indian sellers—and their eventual sale and exports to international customers.
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.
In February, the US removed a 25% penal tariff on India for buying Russian oil besides announcing to cut the 25% reciprocal tariff to 18%.
However, on February 24, Washington imposed a blanket 10% tariff on all countries for 150 days after the US Supreme Court invalidated the earlier tariffs.
The government is also holding consultations on the mechanism for export entities to claim goods and services tax (GST) refunds and duty remissions besides establishing safeguards to prevent misuse of seller-level data, said the official cited above.