The decision, announced by the Department for Promotion of Industry and Internal Trade (DPIIT), aims to provide Indian manufacturers and sellers greater access to overseas markets without affecting the interests of small retailers in the domestic market.
In a press note, the 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 existing consolidated FDI policy, foreign investment is permitted in business-to-business (B2B) e-commerce and marketplace-based e-commerce models. However, FDI remains prohibited in business-to-consumer (B2C) e-commerce as well as inventory-based e-commerce, where an e-commerce entity owns inventory and sells goods directly to consumers.
To operationalise the change, the DPIIT has inserted a new provision in the FDI policy allowing e-commerce entities to adopt the inventory-based model solely for exports.
The newly added clause states: “An e-commerce entity is permitted to engage in inventory-based model of ecommerce exclusively for the export of goods/products manufactured and/or produced in India as per the applicable provisions of the Foreign Trade Policy 2023…and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015”.
The relaxation is limited to exports of goods manufactured or produced in India, meaning the existing restrictions on inventory-led e-commerce for the domestic market will continue to remain in force.