The government is planning to allow foreign direct investment in the inventory-based ecommerce model for exports while setting guardrails such as separate warehouses and mandatory inventory tracking to differentiate export-bound stock from articles to be sold in the domestic market.
This move is part of the government’s plan to permit inflow of foreign investment in inventory-based ecommerce without affecting the businesses of small retailers, according to a report by The Economic Times.
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The plan requires mandatory physical segregation of goods meant for export to ensure that they are not sold in the domestic market.
The government has also sought opinions from industry stakeholders on the plan, which is still under evaluation. The Ministry of Commerce and Trade has also asked for reviews from other ministries.
As various departments of the government are involved in the consultation, the process may take time before clarity on the implementation of the proposal emerges.
The Logistics Bottleneck: Can AI Finally Solve The Last-Mile Crisis In eCommerce?Currently, the government’s FDI policy does not allow overseas investments in the inventory-led ecommerce model. Full ownership by foreign companies is only permitted in the marketplace model.
As per the government’s plan, companies will be allowed to form a separate export-oriented entity that will buy goods from domestic retailers to ship them to international customers based on pre-confirmed orders.
Currently, India’s annual ecommerce exports range from $4-5 billion, which is a fraction of the overall ecommerce market of $150 billion. Over $8 trillion of global ecommerce trade is expected to take place in 2026.
The Indian small and medium enterprises (SME) segment is expected to be the biggest beneficiary of the proposed plan. According to the report, almost 70 percent of SME businesses in India use ecommerce platforms for selling products, particularly in segments such as fashion and apparel, gems and jewellery, home and living, organic wellness, beauty, and handicraft products.