FDI in India E-Commerce: DPIIT Press Note 3 (2026) Opens Inventory-Based Export Route
India''s FDI policy for e-commerce has had one inviolable rule for nearly a decade: foreign money can fund the marketplace platform, but not the inventory. On July 23, 2026, DPIIT Press Note No. 3 (2026 Series) created the first exception — foreign-invested e-commerce entities may now operate an inventory-based model, but exclusively for the export of goods manufactured or produced in India.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Source: DPIIT Press Note No. 3 (2026 Series), July 23, 2026
India's FDI policy for e-commerce has had one inviolable rule for nearly a decade: foreign money can fund the marketplace — the platform — but not the inventory. On July 23, 2026, that rule acquired its first exception.
The Department for Promotion of Industry and Internal Trade (DPIIT) issued Press Note No. 3 (2026 Series), inserting a new paragraph (5.2.15.2.5) into the Consolidated FDI Policy. Foreign-invested e-commerce entities may now operate an inventory-based model — but strictly and only for the export of goods manufactured or produced in India.
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Why Was Inventory-Based E-Commerce FDI Prohibited?
Under the pre-2026 policy, 100% FDI was permitted in e-commerce only under the marketplace model, where the platform connects independent buyers and sellers without owning stock. The inventory-based model — where the entity owns goods and sells directly to the end buyer — was prohibited to protect domestic retailers and MSMEs from deep-pocketed foreign-backed competitors.
Large foreign-invested platforms operate under the marketplace structure for precisely this reason.
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What Press Note 3 (2026 Series) Changes
A new paragraph (5.2.15.2.5) has been inserted into the Consolidated FDI Policy:
Foreign-invested e-commerce entities may operate an inventory-based model exclusively for the export of goods that are manufactured or produced in India.
Three operative conditions, all mandatory:
- The model is inventory-based (entity owns the goods)
- Sales are exclusively for export — buyer must be outside India
- Goods must be manufactured or produced in India
What remains prohibited: B2C domestic sales by inventory-based foreign-funded e-commerce entities.
What is unchanged: Marketplace model, 100% FDI, automatic route.
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Who Benefits?
Indian manufacturers seeking global distribution: A foreign investor can now back an e-commerce entity that warehouses Indian-manufactured goods and ships directly to overseas buyers.
Export-oriented startups: Companies targeting global markets can receive FDI and build an inventory-based export channel — a structure previously unavailable.
Global e-commerce platforms with India FDI entities: Can create dedicated export verticals for Indian goods.
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FEMA Compliance Requirements
Entities receiving FDI and operating under this carve-out must comply with:
- Foreign Trade Policy 2023 and Handbook of Procedures
- FEM (Export of Goods and Services) Regulations, 2015 — export proceeds must be realised in freely convertible foreign currency within 9 months (for most goods)
- FC-GPR — on the FIRMS portal within 30 days of equity allotment to the foreign investor
- FLA Return — annual filing on FLAIR portal by July 15 (or extended deadline; revised return with audited data by September 30)
- FC-TRS — if equity shares are subsequently transferred between resident and non-resident, within 60 days of transfer
Non-compliance with FEMA reporting is a contravention subject to compounding under the Foreign Exchange (Compounding Proceedings) Rules, 2024.
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Critical: NDI Rules Not Yet Formally Amended
This Press Note is a policy statement. The legally binding framework is the FEM (Non-Debt Instruments) Rules, 2019 (NDI Rules), which as of the date of this article have not been formally amended to incorporate this carve-out.
Separately, the RBI released Draft FEMA (Foreign Investment) Rules, 2026 on July 21, 2026, to supersede the NDI Rules entirely. Public comments close August 31, 2026. Once finalised, this new framework will govern all FDI including this e-commerce carve-out.
Practical guidance: obtain a legal opinion before structuring transactions based on this carve-out. The gap between a Press Note and a notified NDI Rules amendment is where structuring risk sits.
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See Also
Frequently Asked Questions
Can an existing marketplace-model company add an inventory-based export arm?+
Not without a legal review. Structural changes typically require Board approval, a possible EGM resolution, ROC filings, and a review of the conditions under which the original FDI was received. The representations made at the time of original FDI may not cover an inventory-based model.
What is the FDI cap for inventory-based e-commerce exports under PN3/2026?+
100% under the automatic route — the same as the marketplace model. DPIIT Press Note No. 3 (2026 Series) extends the existing 100% automatic route to this carve-out; it does not impose a new cap or require government approval.
What controls are needed to ensure sales go only to overseas buyers?+
Robust geofencing, buyer address verification, and contractual restrictions are essential. Domestic B2C sales through an inventory model remain prohibited under the Consolidated FDI Policy and constitute a FEMA contravention.
Should we wait for the NDI Rules to be formally amended before structuring?+
For significant investment decisions, yes — or obtain a legal opinion that accounts for the current FEM (NDI) Rules 2019 and the pending Draft FEMA (Foreign Investment) Rules 2026, whose public comment period closes August 31 2026.
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