> **Legal basis:** Not yet codified — based on DPIIT guidance as of July 2026. ## The Policy Shift On 23 July 2026, the Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note 3 (2026 Series), introducing a narrow but commercially significant change to India's FDI Policy. Foreign investment is now permitted under the automatic route, up to 100%, in Indian inventory-based e-commerce entities — but only where the entity exclusively exports domestically manufactured or produced goods. The long-standing prohibition on FDI in inventory-based e-commerce for domestic retail stays exactly as it was. This is an export-only carve-out, not a general opening of the inventory model. ## How the FDI E-Commerce Framework Now Reads India's FDI Policy has always drawn a sharp line between two e-commerce structures. Press Note 3 (2026) adds a third position to that line. | E-commerce model | Business activity | FDI treatment | | --- | --- | --- | | Marketplace model | Platform connects buyers and sellers; does not own inventory | 100% FDI, automatic route — always permitted | | Inventory model — domestic retail | Entity owns the goods and sells to Indian consumers | FDI prohibited — unchanged | | Inventory model — export only (Press Note 3, 2026) | Entity owns the goods and exports domestically manufactured/produced goods exclusively | 100% FDI, automatic route — new | Under the marketplace model, the platform never owns the inventory it lists — it connects buyers and sellers and earns a fee. That structure has always attracted 100% automatic-route FDI. Under the inventory model, the entity owns the stock it sells, and FDI into that structure has been prohibited where the buyer is an Indian consumer. Press Note 3 changes the outcome only where every single sale under the inventory model is an export. > **Key point:** FDI up to 100% under the automatic route is now permitted in inventory-based e-commerce entities, but only where the entity exclusively exports domestically manufactured or produced goods and does not sell to Indian consumers. ## What Press Note 3 (2026) Requires For the exception to apply, the Indian e-commerce entity must meet all of the following at once: - Operate an inventory-based model, meaning it owns the goods listed and sold on its platform. - Use that platform exclusively to export goods to overseas buyers. - Sell only goods manufactured or produced domestically in India. - Avoid using the same platform for any domestic retail sale to an Indian consumer. Fail any one of these conditions and the entity falls back into the general inventory-model prohibition — this is not a partial or proportionate relaxation. ## Effective Date and FEMA Notification — the Caveat That Matters Press Note 3 (2026 Series) is DPIIT's statement of policy intent. It does not, by itself, make foreign investment legal under FEMA. That requires a corresponding Foreign Exchange Management (Non-Debt Instruments) Amendment Rules notification from the Ministry of Finance, published in the Gazette of India. As of this review, that FEM (NDI) notification had not been confirmed in the Gazette. Entities and investors relying on Press Note 3 should not allot FDI shares under this new carve-out until the corresponding FEM (NDI) Amendment notification is confirmed in the official Gazette. Acting on the press note alone, ahead of the notification, risks a FEMA contravention. ## A Practical Illustration Consider a Hyderabad-based artisan goods company that sells Indian handicrafts internationally through its own inventory-based website — it stocks and ships the products itself. A UK-based investor wants to put in USD 10 lakh. Under the pre-2026 rules, this investment was not permitted, because inventory-based e-commerce FDI has been prohibited regardless of destination market. Under Press Note 3 (2026), the investment becomes permissible — but only once the company's platform is confirmed to exclusively export India-made goods, carries no domestic retail sales, and the FEM (NDI) Amendment notification has actually been issued. Once shares are allotted, the standard post-allotment reporting obligation applies: Form FC-GPR on the FIRMS portal (firms.rbi.org.in), within 30 days of allotment. ## Compliance Checklist for Entities Relying on This Carve-Out - [ ] Confirm the FEM (NDI) Amendment notification has been issued in the Gazette of India before proceeding. - [ ] Pass a board resolution approving the allotment and confirming the entity's export-only business model. - [ ] Obtain a valuation certificate from a SEBI-registered valuer where shares are issued above face value. - [ ] File Form FC-GPR on the FIRMS portal within 30 days of allotment. - [ ] File the annual FLA Return by the applicable due date for the following year. - [ ] Build ongoing checks to ensure the platform never serves domestic Indian consumers — a breach revives the prohibition. ## What This Means for You If your company runs an inventory-based export e-commerce model, this carve-out could open a funding route that was closed to you until now. But timing matters as much as eligibility here: the Press Note sets direction; the FEM (NDI) notification sets the law. Getting the sequence wrong — allotting shares before the notification lands — turns a compliant transaction into a FEMA contravention. Given how much rides on getting the entity structure, the board documentation, and the reporting timeline right, this is exactly the kind of transaction worth planning with your CA before the first rupee changes hands. I'm CA Harun Raaj, Visakhapatnam. If your business is structuring inventory-based export e-commerce FDI, reach out before you allot shares — the sequencing here matters more than the paperwork. --- ## See Also - [RBI FCNR(B) Swap Window Closes 30 Sept 2026: NRI Action Guide](https://www.harunraaj.com/blog/rbi-fcnrb-swap-window-closes-30-september-2026-nri-guide) - [FLA Revised Return by 30 September 2026: Who Must File](https://www.harunraaj.com/blog/fla-revised-return-30-september-2026-who-must-file) - [FDI in India E-Commerce: DPIIT Press Note 3 (2026) Opens Inventory-Based Export Route](https://www.harunraaj.com/blog/fdi-ecommerce-inventory-export-india-dpiit-press-note-3-2026) Canonical: https://www.harunraaj.com/blog/dpiit-press-note-3-2026-fdi-inventory-ecommerce-exports