The government on Thursday 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. The move is aimed at facilitating greater exports by giving Indian sellers easier access to global markets.
The Department for Promotion of Industry and Internal Trade (DPIIT) said the existing FDI policy has been reviewed to promote exports through e-commerce. The department said the revised framework is intended to support Indian manufacturers and producers in expanding their overseas reach.
Under the existing policy, FDI is permitted in business-to-business (B2B) e-commerce and the marketplace model of e-commerce. However, DPIIT noted that foreign investment is not permitted in business-to-consumer (B2C) e-commerce or the inventory-based model, where the inventory of goods is owned by the e-commerce entity and sold directly to consumers.
Export-Only Relaxation
Announcing the policy change, DPIIT said the restrictions on the inventory-based model of e-commerce will not apply in the case of exports of goods and products manufactured or produced in India. The department said the decision was taken to facilitate greater exports through easier and increased access to global markets by Indian sellers.
Under the revised policy, a new provision has been inserted permitting an e-commerce entity to engage in the inventory-based model exclusively for the export of goods manufactured or produced in India. DPIIT said the provision applies only to exports and does not alter the existing policy governing domestic e-commerce.
According to the department, exports under the new provision will have to comply with the Foreign Trade Policy 2023, the Handbook of Procedures, and the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, as amended from time to time.
DPIIT further clarified that the restrictions applicable to B2C e-commerce and the inventory-based model will not apply to exports undertaken through e-commerce under the newly inserted provision. The department said the amended policy will come into effect from the date of notification under the Foreign Exchange Management Act (FEMA). |
