Govt eases FDI norms for export-focused e-commerce entities

New Delhi [India], July 23 (ANI): The government has amended the foreign direct investment (FDI) policy to allow FDI in the inventory-based model of e-commerce exclusively for exports of goods manufactured or produced in India, in a move aimed at boosting exports through e-commerce.

The Department for Promotion of Industry and Internal Trade (DPIIT) said the existing FDI policy has been reviewed to facilitate greater exports by Indian sellers.

The department noted that under the current policy, “FDI is permitted in Business to Business (B2B) e-commerce and marketplace model of e-commerce. However, FDI is not permitted in Business to Consumer (B2C) e-commerce and inventory-based model of e-commerce where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.”

Announcing the policy change, DPIIT said, “In order to facilitate greater exports through easier and increased access of global markets by Indian sellers, the extant FDI Policy has been reviewed and it is decided that the restrictions on inventory-based model of e-commerce shall not apply in case of exports of domestically manufactured and/or produced goods/products.”

Under the revised policy, a new provision has been inserted allowing an e-commerce entity to engage in the inventory-based model only for exports.

The new provision states, “An e-commerce entity is permitted to engage in inventory-based model of e-commerce exclusively for the export of goods/products manufactured and/or produced in India” in accordance with the Foreign Trade Policy 2023, the Handbook of Procedures, and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, as amended from time to time.

It further clarifies that “the restrictions on B2C and the inventory-based model of e-commerce… shall not apply to the export of goods/products through e-commerce” under the newly inserted provision.

DPIIT said the decision will come into effect from the date of notification under the Foreign Exchange Management Act (FEMA). (ANI)

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