India has introduced a new export-focused inventory-based framework for foreign-owned e-commerce companies, aiming to broaden its export base while keeping domestic sales restrictions intact. The move is seen as a step to support smaller manufacturers and MSMEs in accessing global markets.
India has moved to open a new export channel for foreign-owned e-commerce groups, allowing them to use an inventory-based model to ship Indian-made goods overseas if they set up separate legal entities in the country. The Directorate General of Foreign Trade issued the framework after the Department for Promotion of Industry and Internal Trade’s Press Note 3 of 2026, which Reuters-style reporting in Business Standard and other Indian business outlets said was designed to permit 100% foreign direct investment in inventory-based retail e-commerce entities, but only for exports. The policy leaves the domestic sales ban intact.
Under the new rules, companies such as Amazon and Walmart-owned Flipkart would need to register a distinct entity with the DGFT as an Exporter-on-Record, hold an Importer-Exporter Code and GST registration, and ensure that domestic suppliers designated as Sellers-on-Record are also GST-registered. According to the notification, those suppliers may provide only goods of Indian origin. The framework also requires inventory to be backed by confirmed export orders rather than speculative stockpiling, and each shipment must be digitally linked to the seller, overseas customer order and export paperwork.
The government has also tightened the handling of returns. Any goods sent back or rejected abroad must be managed through reverse logistics and cannot be diverted into the Indian market, whether directly or through another entity. The framework permits exporters to use notified e-commerce export hubs and says the Exporter-on-Record will be able to claim applicable export incentives, though not benefits under Advance Authorisation or the Export Promotion Capital Goods scheme. GST refunds will also remain with the exporter entity, according to the notification.
Industry reaction has been broadly positive. Amazon said the policy brings clarity to inventory-based e-commerce exports and supports its aim of helping generate $80 billion in cumulative exports from India by 2030. Trade specialists said the change could widen India’s exporter base by giving smaller manufacturers and MSMEs access to global buyers through large online platforms. Ajay Srivastava, founder of the Global Trade Research Initiative, said the structure resembles the export house model, while Spencer Cohen, principal and founder of High Peak Strategy, said it could help smaller firms overcome the logistics, payments and market-access barriers that have long limited cross-border sales.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
