India allows 100% FDI in export-only inventory e-commerce.
The Department for Promotion of Industry and Internal Trade (DPIIT) has issued Press Note No. 3 (2026 Series), permitting 100% foreign direct investment (FDI) under the automatic route in inventory-based e-commerce entities, provided the inventory is sold exclusively through export channels. The change gives foreign-funded platforms a new route to use India as an export and global supply-chain hub, supporting the government’s broader push to grow India’s e-commerce exports.
What has changed
Under the existing FDI framework, 100% FDI has been allowed under the automatic route only in the marketplace model of e-commerce, where a platform facilitates transactions between independent buyers and sellers without owning the goods sold. FDI in the inventory-based model, where the e-commerce entity owns the goods it sells, has remained prohibited.
Press Note No. 3 carves out an exception to this for export activity. Foreign-funded entities can now purchase, hold and directly export goods manufactured or produced in India under the inventory-based model. Domestic retail sales through a foreign-funded, inventory-based structure remain off limits, so the marketplace model and the general prohibition on domestic inventory-based retail are otherwise unchanged.
The relaxation takes full legal effect once the corresponding FEMA notification is issued.
A boost for Indian MSMEs
The change is aimed at improving Indian manufacturers’ access to global markets, particularly small and medium enterprises in sectors such as apparel, jewellery, handicrafts, home products and organic wellness. These businesses will be able to reach international buyers through the logistics and distribution networks of large e-commerce platforms.
What this means for foreign investors
This is a targeted change rather than a broader opening of India’s foreign investment rules. Restrictions on domestic e-commerce and multi-brand retail remain firmly in place, and the exception applies only to export-facing inventory.
An export-only inventory operation sits within several existing frameworks, including the Foreign Trade Policy 2023 and its Handbook of Procedures and the FEMA (Export of Goods and Services) Regulations 2015. It also operates separately from any domestic marketplace activity run by the same group, and the exception applies only once the corresponding FEMA notification is issued.
For foreign platforms weighing this route, the practical work is structural: aligning the FDI, FEMA, tax and export documentation requirements and keeping export operations clearly separated from any existing domestic marketplace presence within the same group. Confirming whether the notification has been issued is the starting point, since the exception cannot be relied on until it takes legal effect. Platforms that prepare the structure early will be better positioned to use the route once it is in force.
Companies weighing an export-focused structure in India can consult an FDI and exchange control specialist to confirm scope and put the right structure in place before the notification takes effect.
