Finance Ministry changes rules for foreign-funded e-commerce companies
New Delhi, Sept 4: In change of rules, the Union Finance Ministry has allowed foreign-funded e-commerce companies to maintain inventory for exports, opening a new route for platforms to build and sell stocks of Indian-made goods in overseas markets.
The change, notified through amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, permits e-commerce entities to maintain inventory exclusively for exports.
The move is aimed at supporting the international sale of goods manufactured or produced in India.
The relaxation, however, does not extend to domestic business-to-consumer (B2C) sales.
The existing restrictions on foreign-funded inventory-based e-commerce operations in the domestic market remain unchanged.
Under the revised framework, eligible e-commerce companies can hold their own inventory for export, subject to the Foreign Trade Policy 2023, the Handbook of Procedures and applicable foreign exchange regulations.
The policy could allow global e-commerce platforms with foreign investment to take greater control over sourcing, stocking and selling Indian products in overseas markets.
The government has maintained the distinction between export-oriented inventory and domestic retail. Foreign-funded e-commerce entities therefore cannot use the new provision to operate an inventory-based model for domestic B2C sales.
Companies seeking to use the export exemption will also need to demonstrate that the goods qualify as Indian-origin products and that exports comply with foreign trade and foreign exchange rules.
The framework places compliance at the centre of the relaxation, particularly around export documentation, realisation of export proceeds and reporting requirements under the Foreign Exchange Management Act.
The amendment consequently provides e-commerce platforms with more room to support India’s exports without signalling a broader change in the government’s policy on foreign investment in domestic inventory-based retail. (BVI)
