New framework requires export inventory to be procured against confirmed overseas orders and routed through registered Exporter-on-Record entities
Foreign-invested ecommerce companies operating inventory-based models exclusively for exports can procure goods only against confirmed overseas orders, with the government barring speculative stockpiling for outbound shipments under a new regulatory framework. The Directorate General of Foreign Trade (DGFT) has notified the operational framework after the government on 23 July permitted foreign direct investment (FDI) in inventory-based ecommerce operations exclusively for exports.
The policy is aimed at expanding India’s ecommerce exports, with eligible companies required to export goods manufactured or produced in India.
Under the new rules, a foreign-invested ecommerce company seeking to hold inventory exclusively for exports through online channels must operate through a registered Exporter-on-Record (EOR). The EOR must hold a valid Import Export Code (IEC) and Goods and Services Tax Identification Number (GSTIN), and be registered with the DGFT under the inventory-based cross-border ecommerce facilitation framework.
The export-only operation must be conducted through a separate legal entity established specifically for the purpose. At the time of registration or amendment as an EOR, the entity must disclose its shareholding pattern and the nature of its ownership or control relationship with the ecommerce company.
The EOR can procure goods manufactured or produced in India from Indian sellers-on-record, but only against confirmed overseas orders. Sellers must also correctly declare the origin of the goods supplied for export.
“By leveraging a registered EOR, Indian sellers can access overseas markets while delegating export documentation, customs formalities, destination-country regulatory compliance, product testing and certification, packaging, labelling, fulfilment, logistics and reverse logistics, to the EOR,” the Commerce Ministry said.
Inventory Restrictions
The framework requires export inventory to be separately identified and segregated, with its movement recorded through a digital repository to ensure traceability. Such inventory cannot be diverted for sale in the domestic market. The rules also prohibit ecommerce companies from accumulating inventory in anticipation of potential overseas demand. Goods can be procured only after an export order has been confirmed.
Payments to Indian sellers must be made within the prescribed timeline and cannot be made conditional on the EOR receiving payment from overseas buyers. For returned or rejected shipments, the goods must either be re-exported, returned to the seller or disposed of in accordance with the prescribed procedures.
The framework also establishes accountability for export compliance and provides for transparency in overseas sales, while seeking to ensure that Indian manufacturers and micro, small and medium enterprises (MSMEs) receive the benefits associated with ecommerce exports.
Dispute Resolution
Any dispute or grievance between an EOR and a seller will be referred to the concerned regional authority of the DGFT. The Commerce Ministry said the framework would help Indian manufacturers, traders and MSMEs participate more extensively in global ecommerce supply chains by providing access to organised fulfilment networks.
“The framework is expected to facilitate greater participation of Indian manufacturers, traders and MSMEs in global ecommerce supply chains by providing access to organised fulfilment networks while ensuring transparency, timely payment, effective pass-through of export benefits and robust regulatory oversight,” the ministry said.
The government is seeking to expand India’s ecommerce exports, which are currently estimated at less than USD 5 billion. China’s ecommerce exports, by comparison, are estimated at around USD 350 billion. Global ecommerce trade is estimated at about USD 800 billion and is projected to reach USD 2 trillion by 2030, pointing to significant scope for India to expand its share of cross-border online commerce.
