India Opens E-Commerce FDI for Exports—with Important Guardrails

Press Note 3 of 2026 introduces a welcome but carefully limited change to India’s FDI policy for e-commerce. Until now, a foreign-funded e-commerce company could generally operate only as a marketplace—connecting buyers and sellers without owning the products. Under the new policy, it can purchase and own goods made in India, provided they are sold exclusively to customers outside India. The restriction on foreign-funded inventory-based sales to Indian consumers remains unchanged.

This could particularly benefit Indian manufacturers and MSMEs that have export potential but lack the resources to manage overseas marketing, customs, product certifications, logistics, payments and returns. These responsibilities can now be handled by a dedicated Exporter-on-Record, which will purchase the goods, export them in its own name and manage the related compliances.

The detailed DGFT framework also protects Indian sellers. They must generally be paid within seven days after their goods are accepted, irrespective of whether the overseas customer has paid or subsequently returns the goods. Most export incentives must also be passed on to them.

However, an important restriction may reduce the practical benefit of the new model. The e-commerce company can purchase goods from an Indian seller only after it has received a confirmed order from an overseas customer. For example, it cannot anticipate demand for Indian handicrafts or garments, purchase them in bulk and keep them ready for immediate export. It must first receive an overseas order and only then purchase the relevant goods from the Indian seller.

This reduces the ability of platforms to forecast demand, build export inventory and offer faster delivery—the principal advantages of a conventional inventory-based business. In practice, therefore, the framework may operate more like an order-based procurement system than a true inventory model.

Clarity may also be needed on what qualifies as goods of “Indian origin”, particularly where imported components are used.

Overall, this is a sensible reform that could improve global market access for Indian businesses. Its success will depend on whether the safeguards protect Indian sellers without diluting the model’s commercial benefits.