The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, Government of India, has, by way of Press Note No. 3 (2026 Series) dated July 23, 2026 (‘Press Note’), amended the Consolidated FDI Policy dated October 15, 2020 (‘FDI Policy’) in relation to inventory-based model of e-commerce. The Department of Economic Affairs (DEA), Ministry of Finance, Government of India has also, by way of the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026 dated September 2, 2026 (‘Fourth Amendment’), amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (‘NDI Rules’) to carry out corresponding changes. Prior to the amendment, under the FDI Policy and the NDI Rules:

i.     100% foreign direct investment (‘FDI’) under the automatic route was permitted in the marketplace model of e-commerce; and

ii.    FDI was not permitted in the inventory-based model of e-commerce.

In order to facilitate greater exports through easier and increased access to global markets for Indian sellers, the Government has decided that the restrictions on inventory-based model of e-commerce will not apply in case of export of domestically manufactured and/or produced goods/products. Accordingly, pursuant to the Press Note, a new paragraph 5.2.15.2.5 has been inserted under paragraph 5.2.15.2 (E-Commerce Activities) of the FDI Policy, which permits e-commerce entities to engage in the inventory-based model of e-commerce, exclusively for the export of goods/products manufactured and/or produced in India, in accordance with the provisions of the Foreign Trade Policy 2023, read with the Handbook of Procedures and the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015. This represents a targeted exception to the long-standing prohibition on FDI in the inventory-based model of e-commerce.

The Fourth Amendment inserts a new paragraph 15.2.5 in the table under Schedule 1 of the NDI Rules to reflect the corresponding changes specified in the Press Note. These amendments have taken effect from September 2, 2026, being the date on which the Fourth Amendment was notified in the Official Gazette.

Pursuant to these amendments, the previous restrictions on the business of inventory-based model of e-commerce stipulated under paragraphs 5.2.15.2.1 to 5.2.15.4 of the FDI Policy and under provisions 15.2.1 to 15.2.4 of Schedule I of the NDI Rules will not apply to the export of goods or products through e-commerce as mentioned above.