Politics · India Bureau
India permits e-commerce firms to hold inventory for exports under FDI rules
The Department of Economic Affairs has amended Foreign Direct Investment norms to allow e-commerce companies to maintain inventory exclusively for exporting goods manufactured in India. The move, notified on September 2, operationalizes a policy decision announced in July.
LSN India ·
India's finance ministry has formally allowed foreign-invested e-commerce firms to engage in inventory-based business models, but exclusively for exporting domestically manufactured goods. The Department of Economic Affairs issued the notification on September 2, amending the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.
Under the revised framework, e-commerce entities holding foreign direct investment can maintain inventory only for export purposes. The goods must be manufactured or produced within India and must comply with the Foreign Trade Policy 2023, the Handbook of Procedures, and relevant foreign exchange regulations.
The amendment specifically clarifies that FDI in inventory-based e-commerce retailing for the domestic market remains prohibited. This distinction maintains India's existing restrictions on foreign investment in business-to-consumer inventory models while creating a pathway for export-focused operations.
The formal notification follows a policy decision announced in July, bringing the regulatory change into effect. The move is expected to boost e-commerce exports of Indian-manufactured products while maintaining safeguards on domestic retail operations.