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India has taken an important step towards making cross-border e-commerce easier for Indian manufacturers and sellers.
On 23 July 2026, the Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note No. 3 (2026 Series), reviewing India’s Foreign Direct Investment (FDI) policy for the e-commerce sector.
The major change is that foreign-invested e-commerce companies will be permitted to operate an inventory-based e-commerce model exclusively for exports of goods manufactured or produced in India.
Until now, FDI-backed e-commerce businesses generally had to follow the marketplace model and could not own inventory for direct B2C sales. The new policy creates a specific exception where the goods are Made in India and are being exported.
For Indian manufacturers, MSMEs, foreign investors and global e-commerce platforms, this could make accessing international markets easier.
Table of Contents
- What was the FDI rule for E-Commerce earlier?
- What has changed under Press Note 3 of 2026?
- Which products can be covered under an inventory model?
- Does this mean inventory-based E-commerce is now allowed for domestic sales?
- What compliance rules will businesses still need to follow?
- Why has the Government introduced this change?
- When does the new FDI rule become effective?
- What does this mean for Indian sellers and Foreign E-Commerce Companies?
- What should Businesses do now?
- Final Takeaway
- How Mercurius Can Help
What was the FDI rule for E-Commerce earlier?
Under India’s existing FDI policy, foreign investment is allowed in B2B e-commerce and the marketplace model.
But an e-commerce company with FDI generally could not operate an inventory-based B2C model—meaning it could not own the goods itself and then sell those goods directly to consumers.
For example:
Marketplace model:
Indian seller owns product → lists it on an e-commerce platform → customer purchases it.
Inventory model:
E-commerce company buys/owns product → keeps it in inventory → sells it to the customer itself.
The second model has traditionally been restricted for FDI-backed e-commerce companies in India.
What has changed under Press Note 3 of 2026?
The government has now created an important exception specifically for exports.
According to the DPIIT Press Note:
An e-commerce entity may engage in the inventory-based model exclusively for exporting goods manufactured or produced in India.
In simpler terms, an eligible FDI-backed e-commerce business can now potentially procure Made-in-India goods, own that export inventory and sell those products in overseas markets.
Consider an Indian handicraft manufacturer selling products to international customers.
Under the new framework, the structure could work like this:
Indian manufacturer → E-commerce company procures/owns export inventory → Goods exported from India → Overseas customer
This gives e-commerce companies a more active role in managing cross-border sales rather than merely providing a digital marketplace.
Which products can be covered under an inventory model?
The Press Note specifically applies to goods or products that are:
Manufactured and/or produced in India.
Therefore, the relaxation is focused on encouraging exports of Indian-origin products.
Depending on other applicable laws and product-specific export requirements, this may potentially benefit businesses dealing in areas such as:
- textiles and apparel
- handicrafts and home décor
- leather goods
- jewellery
- electronics manufactured in India
- consumer products
- processed products
- other domestically manufactured goods
However, whether a particular product can actually be exported will still depend on India’s applicable export policy, product restrictions, certifications and other regulatory requirements.
Does this mean inventory-based E-commerce is now allowed for domestic sales?
No. This is one of the most important points businesses need to understand.
The government has not generally opened India’s domestic inventory-based B2C e-commerce sector to foreign investment.
The relaxation is specifically for exports of goods manufactured or produced in India.
So, broadly:
Permitted under the new exception:
Made-in-India goods → owned as inventory by eligible e-commerce entity → exported to foreign customers.
Not covered by this exception:
Goods → owned by FDI-backed e-commerce company → sold directly as inventory to consumers within India.
Therefore, businesses should not interpret Press Note 3 as a general relaxation of India’s FDI restrictions on domestic B2C e-commerce.
What compliance rules will businesses still need to follow?
The policy relaxation does not remove normal export compliance requirements.
DPIIT specifically states that inventory-based e-commerce exports must comply with the applicable provisions of:
- Foreign Trade Policy 2023
- Handbook of Procedures (HBP)
- Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, as amended from time to time.
Therefore, businesses may still have to consider requirements relating to their Importer Exporter Code (IEC), customs documentation, product classification, export restrictions, foreign-exchange realization, GST and other applicable export laws.
The exact compliance requirement will depend on the business structure, product and export model being used.
Why has the Government introduced this change?
The objective is clearly mentioned in the Press Note: to facilitate greater exports by providing Indian sellers easier and increased access to global markets.
This is especially relevant for smaller Indian businesses.
A manufacturer may have a good product but may not have the resources to handle international marketing, warehousing, logistics, customs procedures, payments, returns and other cross-border requirements independently.
Larger e-commerce businesses already operate global technology and fulfilment networks.
Allowing them to participate more directly in the export inventory model could therefore make it easier for Indian businesses to reach overseas customers.
The Foreign Trade Policy 2023 has also placed emphasis on developing cross-border e-commerce as an export channel, particularly for entrepreneurs, artisans and MSMEs. DGFT’s e-commerce export guidance recognises the ability of online platforms to provide services such as logistics, marketing and payment integration to exporters.
When does the new FDI rule become effective?
There is an important legal point in the Press Note.
DPIIT clearly states that:
“The above decision will take effect from the date of FEMA notification.”
The Press Note also forwards the policy change to the Department of Economic Affairs and the Reserve Bank of India for suitable incorporation into the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, relevant schedules and the FIRMS portal.
Therefore, businesses should not treat the DPIIT Press Note alone as the complete operational framework.
They should verify the applicable FEMA amendments and subsequent DGFT/RBI requirements before implementing an inventory-based export structure.
This is particularly important because operational rules can prescribe additional requirements regarding how export inventory is procured, maintained, documented and exported.
What does this mean for Indian sellers and Foreign E-Commerce Companies?
For Indian manufacturers and sellers, the policy could provide easier access to international markets without requiring every small business to build its own complete cross-border e-commerce infrastructure.
For foreign-invested e-commerce companies, it creates a new opportunity to participate more directly in the export of Indian-made products by operating an inventory-led model within the permitted export framework.
For foreign investors considering India, the change also makes India’s e-commerce and export ecosystem more flexible while maintaining a clear separation between export-focused inventory operations and domestic inventory-based online retail.
What should Businesses do now?
Businesses planning to use this model should first understand whether their proposed structure falls within the export-only relaxation.
They should then review their FDI structure, FEMA requirements, Foreign Trade Policy compliance, IEC and GST position, product-specific export rules, customs procedures and foreign-exchange obligations before beginning operations.
It is also important to maintain a clear distinction between inventory meant for export and any domestic e-commerce activities.
Final Takeaway
DPIIT’s Press Note No. 3 of 2026 represents an important change in India’s e-commerce FDI policy.
Instead of completely prohibiting FDI-backed inventory-based e-commerce, India is creating a limited export-focused exception for goods manufactured or produced in India.
The move can potentially connect more Indian manufacturers and MSMEs with global customers, while giving international e-commerce businesses greater flexibility in managing Indian export operations.
However, this should not be confused with permission for unrestricted inventory-based e-commerce within India’s domestic market. The relaxation is specifically focused on exports, and businesses must continue to follow the applicable FDI, FEMA, DGFT, customs and other export compliance requirements.
For businesses planning an FDI-backed e-commerce or cross-border export structure in India, getting the legal and operational model right from the beginning will be critical.
How Mercurius Can Help
Planning to expand your e-commerce or export business in India? Mercurius can support you with FDI structuring, FEMA compliance, company setup, GST, accounting, export documentation and ongoing regulatory compliance.
Our team helps businesses understand the right structure, meet applicable legal requirements and manage compliance smoothly while they focus on growing their business.
Need help with your India e-commerce or export setup? Get in touch with Mercurius today.
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Source:
https://www.dpiit.gov.in/static/uploads/2026/07/ceb0cae74fd4e83094dc6b50c3d53f92.pdf
