The government has operationalized new FDI norms permitting foreign-funded e-commerce platforms to hold inventory of Indian-made goods exclusively for export. This move aims to help local sellers reach international buyers. However, strict rules prohibit selling these goods in the domestic market to prevent unfair competition.
The Directorate General of Foreign Trade (DGFT) has released new guidelines on August 5, 2026, allowing foreign-funded e-commerce companies to maintain an inventory of Indian-manufactured goods. This operational change follows an initial announcement by the Department for Promotion of Industry and Internal Trade (DPIIT) on July 23. The primary goal of this policy is to simplify the export process for local manufacturers, particularly micro, small, and medium enterprises, by allowing them to leverage the logistics networks of large e-commerce platforms.
Under the new framework, e-commerce firms cannot simply use their existing domestic entities to hold this inventory. Instead, they must establish a separate legal entity, which will act as the Exporter-on-Record (EOR). This entity must obtain an Importer-Exporter Code and ensure all GST registrations are in place. These companies are strictly prohibited from holding speculative inventory. This means they cannot buy goods to stock up for future demand; ownership of the goods can only be assumed once there is a confirmed order from an international buyer.
To ensure transparency and compliance, the policy mandates that all exported goods must be digitally linked to the seller, the specific overseas order, and the relevant export paperwork. Furthermore, the EOR must settle payments with Indian suppliers within seven days of the goods being accepted, regardless of when the international payment arrives. This rule is designed to ensure that small Indian suppliers receive their payments without delay.
While this policy opens a new channel for Indian exporters, it has also raised questions regarding enforcement. Because foreign-funded e-commerce marketplaces are generally restricted from holding inventory for domestic sales to protect small local retailers, there are concerns about potential regulatory slippage. Industry observers have pointed out that without strict monitoring, there is a risk that goods intended for export could be diverted to the domestic market, potentially creating a conflict with existing retail FDI rules.
For investors and market participants, the key monitorable will be how effectively these platforms segregate their inventory. The success of this policy depends on strict digital tracking and the ability of regulators to ensure that the export-only inventory model does not become a backdoor for domestic inventory holding. The government’s focus remains on balancing the need for export growth with the protection of the existing domestic retail ecosystem.