India’s trade authorities have activated a formal regulatory structure allowing foreign-funded platforms to operate inventory-based e-commerce export businesses for the first time.
The Directorate General of Foreign Trade issued Notification No. 27/2026-27 and Public Notice No. 25/2026-27, both dated August 5, 2026, bringing the new framework into immediate effect.
The move follows a policy shift by the Department for Promotion of Industry and Internal Trade, which issued Press Note No. 3 (2026 Series) on July 23, 2026, carving out an exemption from longstanding FDI restrictions.
Foreign investment in inventory-based e-commerce had been prohibited under India’s consolidated FDI policy since original sector clarifications were issued in 2016, with only the marketplace model permitted up to 100 percent FDI.
The new exemption applies exclusively to the export of goods manufactured or produced in India, leaving the domestic business-to-consumer prohibition entirely intact and unchanged.
The Inventory-based Cross-Border E-Commerce Facilitation Framework has been inserted into the Foreign Trade Policy 2023 and its accompanying Handbook of Procedures 2023, giving it formal statutory standing.
The Framework establishes two distinct participants in every export transaction: an Exporter-on-Record, a separate legal entity that holds inventory and conducts the export, and a Seller-on-Record, an Indian entity that supplies domestically produced goods against confirmed export orders.
A key structural safeguard prevents speculative stockpiling by prohibiting any Exporter-on-Record from procuring goods unless a confirmed order from an overseas buyer already exists.
The Exporter-on-Record must pay the Seller-on-Record within seven days of accepting goods, regardless of whether the overseas buyer has paid or whether the goods are subsequently returned.
Export rebates and refunds that the Exporter-on-Record claims must be passed on to the Seller-on-Record in proportion to the Free On Board value of their goods, after deducting an agreed administrative charge.
Returned or rejected goods received from overseas buyers must be re-exported, returned to the Seller-on-Record, or destroyed within 30 days of receipt back in India.
Returned goods are explicitly barred from being sold into the Indian domestic market, either directly by the Exporter-on-Record or through any third-party arrangement.
Ongoing compliance obligations include retaining operational records for five years, even after a registration is cancelled or surrendered, and obtaining an annual compliance certificate from an eligible professional.
Disputes between an Exporter-on-Record and a Seller-on-Record may be referred to the relevant DGFT Regional Authority, which is expected to seek resolution within thirty days before escalating unresolved matters to DGFT headquarters.
Seller-on-Record protections sit alongside, and do not override, existing statutory rights available under the Micro, Small and Medium Enterprises Development Act, where applicable.
For Indian manufacturers and MSMEs, the Framework provides a formal channel to reach international buyers through organised fulfilment networks, with statutory backing for payment terms that informal export intermediary arrangements have not always reliably guaranteed.
Global e-commerce platforms with foreign investment can now establish dedicated export verticals, aggregating products from multiple Indian sellers while managing warehousing, logistics, documentation and reverse logistics end to end.
Trade analysts view the confirmed-order procurement requirement and strict inventory segregation rules as deliberate design choices to prevent the export exemption from being used to indirectly service India’s domestic consumer market.