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The Government has revised the Foreign Direct Investment (FDI) policy to allow foreign-funded e-commerce companies to own and maintain inventories exclusively for exporting goods manufactured or produced in India. The change creates an export-specific exemption while retaining restrictions on inventory-based e-commerce for domestic retail sales.

What is the Revised FDI Policy?

• The revised policy permits foreign-owned e-commerce entities to procure, own, and manage inventories in India only for export purposes. The products must be manufactured or produced in India and sold exclusively in overseas markets.
• However, the existing prohibition on foreign-funded inventory-based e-commerce for domestic B2C retail sales continues, thereby protecting small retailers and maintaining the ban on FDI in multi-brand retail.
• The policy will come into force after the relevant notification under the Foreign Exchange Management Act (FEMA), 1999.

Key Features

• The policy creates a dedicated export-specific exception to India's existing FDI rules for e-commerce.
• Global e-commerce companies such as Amazon and Flipkart can now source products directly from Indian manufacturers, maintain export inventories, and manage activities such as quality testing, packaging, labelling, traceability, and export logistics.
• The measure aims to reduce compliance burdens for exporters and improve access to international markets, particularly for MSMEs, artisans, and manufacturers located in Tier-2 and Tier-3 cities.

Inventory-Based vs Marketplace Model