On July 23, 2026, the Department for Promotion of Industry and Internal Trade (DPIIT) issued a Press Note 3 (2026) reviewing para 5.2.15.2 of the Consolidated FDI Policy Circular of 2020 (FDI Policy), providing for relaxation where an Indian entity having foreign investment is permitted to engage in an inventory-based e-commerce model exclusively for the export of goods or products manufactured or produced in India.

This relaxation enables Indian manufacturers to sell goods to e-commerce entities, which can procure them as export inventory against confirmed export orders, for supply to foreign markets, while the prohibition on domestic B2C sales under the inventory model continues to apply.

The change came through three documents. Reading them in the right order makes it easier to see what each one actually does.

The Rollout, In Order

1. Press Note No. 3 (2026 Series), DPIIT (amending the Foreign Direct Investment Policy 2020)
   DPIIT amended the Consolidated FDI Policy by inserting a new Para 5.2.15.2.5, permitting e-commerce entities with FDI to engage in inventory-based model of e-commerce exclusively for the export of goods/products manufactured and/or produced in India.
   
   
2. Notification No. 27/2026-27, DGFT (amending the Foreign Trade Policy 2023)
   The Directorate General of Foreign Trade (DGFT) inserted a new Section D (Paras 9.13–9.19) into the FTP, titled the “Inventory-based Cross-border E-Commerce Facilitation Framework.” It defines the architecture (Exporter-on-Record, Seller-on-Record, Export Inventory, Domestic Inventory, Export Rebates and Refunds) and sets the substantive conditions: who’s eligible, how title to goods passes, and the core obligations around payment and reverse logistics.
   
   
3. Public Notice No. 25/2026-27, DGFT (amending the Handbook of Procedures 2023)
   It inserts Paras 9.03–9.07 into Chapter 9 of the Handbook of Procedures, covering EOR registration, inventory management, seller visibility, compliance certification, the 10% cap on administrative charges, and dispute resolution. It also introduces ANF-9A, the application form for registering as an Exporter-on-Record.

Why This Took So Long

India has long permitted FDI in the marketplace model of e-commerce, where the platform is a facilitator between buyer and seller, but has kept it out of the inventory-based model. The government’s concern has been that FDI in B2C e-commerce would flood the market with imported goods, hurt small retailers, and work against the Make in India push.

Amazon’s association with Cloudtail, then a major seller on its Indian platform, also featured in the debate around these restrictions. Cloudtail was operated through a joint venture between Amazon and Catamaran, which was not renewed in 2022, bringing Cloudtail’s operations on Amazon’s platform to an end. The arrangement became emblematic of concerns around foreign-funded e-commerce platforms having influence over sellers and the supply of goods, even where they formally operated under the marketplace model.

The export-only exception took shape after the Commerce and Industry Ministry floated the proposal last year, against the backdrop of India’s e-commerce exports remaining under $5 billion, a fraction of China’s roughly $350 billion.

What the Framework Actually Permits

The framework runs on two roles. The Exporter-on-Record (EOR) is a separate legal entity, holding a valid IEC and GSTIN and registered with DGFT, that procures goods from Indian sellers and exports them to buyers located outside India. The Seller-on-Record (SOR) is the entity registered in India under the applicable Goods and Services Tax (GST) law actually supplying goods produced in India.

Where an e-commerce entity wants to run this model, it has to do so through a separate incorporated EOR entity, and must disclose its shareholding pattern and the nature of its ownership or control relationship with that e-commerce entity at the time of registration.

Key obligations built into the framework:

• Title to goods passes from the SOR to the EOR only against a confirmed export order from a buyer outside India. Speculative inventory build-up isn’t permitted.
• The EOR must pay the SOR within 7 days of accepting the goods, and payment cannot be made contingent on the EOR actually being paid by the overseas buyer.
• Export Rebates and Refunds (duty drawback, RoDTEP, RoSCTL, etc.) must be apportioned to sellers by FOB value and disbursed within 30 days of receipt, after an administrative charge capped at 10% of the gross amount.
• Returned or rejected export consignments cannot, under any circumstances, be diverted into the domestic market.
• Sellers get visibility regarding the final sale price, order status, and shipment tracking for their goods.
• The EOR needs an independent CA/CMA compliance certificate every financial year, plus five years of record retention.
• Disputes between EOR and SOR go first to the relevant DGFT Regional Authority, with a 30-day resolution window, and MSME sellers retain their referral rights under the MSME Development Act, 2006.

The Catch: It Isn’t Fully in Force Yet

Press Note 3 itself states that the FDI policy change “will take effect from the date of FEMA notification.” The Notification and Public Notice under the FTP and Handbook of Procedures are in force now, and DGFT has opened registration. But the underlying legal permission for foreign investment sits in the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, which haven’t yet been amended to reflect Press Note 3. Para 2.6.4 of the Master Direction – Foreign Investment in India (updated up to June 15, 2026) still provides that “Foreign investment is not permitted in Inventory based model of e-commerce.” The relaxation is yet to be incorporated therein.

Until the amendment is notified, the NDI Rules continue to broadly prohibit foreign-funded inventory-based e-commerce, subject only to the existing carve-out for Single Brand Retail Trading.

In practice, the compliance architecture is ready before the underlying investment permission is.

Where This Leaves Amazon

Amazon has been vocal about wanting this relaxation. Through its Global Selling programme, the company says it has enabled more than $20 billion in cumulative e-commerce exports from India between 2015 and 2025, ahead of schedule, and is targeting $80 billion by 2030. Once the FDI permission is actually operative, Amazon and comparable platforms such as Walmart-owned Flipkart would be able to set up a dedicated EOR entity, hold India-manufactured inventory earmarked purely for export, and manage international fulfilment directly.

That’s a different position from the one Amazon was in with Cloudtail. This time, inventory ownership for exports is the explicit, disclosed, regulated model, not an arrangement built through an affiliated seller.

Key Takeaways

• The FDI permission itself is not yet legally operative. It activates only once the NDI Rules, 2019 are amended.
• The relaxation is narrow by design: export-only, through a separate registered legal entity, Indian-origin goods only, with an explicit bar on diverting inventory back into the domestic market.
• This is a targeted, export-specific relaxation, not a broader opening of India’s B2C e-commerce market to foreign capital.

Concluding Thoughts

For now, what exists is a fully worked-out rulebook sitting ahead of the law that will actually switch it on. DGFT has done the harder procedural work early, registration, seller protections, dispute resolution, all defined before a single dollar of FDI can legally flow in under this route. Once the FEMA notification is issued, how platforms like Amazon and Flipkart structure their EOR entities within this framework will determine how quickly this new route translates into a meaningful channel for Indian exporters.