The Directorate General of Foreign Trade (DGFT) has now notified a framework requiring foreign-owned e-commerce firms to create separate legal entities for inventory-based exports of Indian-made goods under the revised FDI policy. As reported by Business Standard, Amazon and Walmart-owned Flipkart will need to set up separate legal entities in India to undertake export operations of Indian-manufactured products through the inventory model. The separate legal entity must be registered with the DGFT as an Exporter-on-Record (EOR) with an Importer-Exporter Code (IEC) and Goods and Services Tax (GST) registration. Under the new framework, Indian suppliers will be called Sellers-on-Record (SORs), who must be registered under GST and can supply only Indian-origin goods. The framework follows the industry department's move last month to allow 100 per cent foreign direct investment (FDI) in inventory-based retail e-commerce entities for the export of domestically manufactured goods through Press Note 3 of the 2026 series.
The policy change significantly benefits the One District One Product (ODOP) initiative, which currently covers 1,244 products across 773 districts under the Department for Promotion of Industry and Internal Trade (DPIIT). As reported by Business Standard, MSMEs and handicraft artisans will now have substantial opportunities to access global markets through this easing of FDI norms. The initiative aims to promote at least one product from each district of the country, with extensive consultations conducted to finalize these changes. The framework is designed to simplify cross-border trade for Indian businesses by allowing exporters to handle packaging, labelling, product testing, certification, logistics, fulfilment and reverse logistics on behalf of sellers, reducing compliance burdens and enabling manufacturers and MSMEs to focus on production and expanding into overseas markets.
Under the new framework, e-commerce companies cannot buy goods merely to build inventory for possible future demand. The EOR can acquire ownership of goods only after receiving a confirmed order from an overseas buyer. Export goods must be kept separate and digitally linked to the seller, overseas order and export documents. The EOR can claim export benefits such as Duty Drawback, Remission of Duties and Taxes on Exported Products (RoDTEP) and Rebate of State and Central Taxes and Levies (RoSCTL), but these benefits must be shared with sellers. GST refunds will remain with the EOR, while the sharing requirement does not cover Advance Authorisation and Export Promotion Capital Goods (EPCG) benefits. The e-commerce entity will be responsible for distinctly identifying, segregating and maintaining export inventory, and for maintaining a digital repository enabling identification, tracking and traceability of all export inventory.
The policy amendment is part of the government's broader strategy to facilitate greater exports through easier and increased access to global markets by Indian sellers. As reported by Business Standard, the proposal was initially mooted by the Directorate General of Foreign Trade (DGFT) to boost India's exports through e-commerce channels. E-commerce stakeholders have also demanded similar changes, with DPIIT dealing with FDI-related issues as an arm of the commerce and industry ministry. The framework introduces several safeguards to ensure transparency and prevent misuse, including export inventory can be procured only against confirmed international orders, prohibiting speculative stockpiling, and goods earmarked for export must be digitally recorded, clearly segregated and remain traceable throughout the supply chain. To protect Indian sellers, the framework mandates they receive payments within the prescribed timeline and requires export incentives, rebates and refunds to be passed on to sellers in proportion to the free-on-board (FOB) value of their goods.
An Amazon spokesperson welcomed the government's decision, stating that "this policy clarity strengthens our vision of helping Indian businesses reach global customers. Importantly, this initiative empowers tier-II and tier-III manufacturers to go global and establish Brand India on the world stage. We're committed to supporting India's export ambitions, working towards our $80 billion cumulative export target by 2030, reflecting confidence in India's manufacturing prowess." According to Business Standard, the global e-commerce trade is valued at about $800 billion currently and is estimated to reach $2 trillion by 2030. The new framework is expected to deepen India's integration into global e-commerce supply chains while ensuring accountability, transparency and timely benefits for domestic exporters. E-commerce companies may also utilise notified E-Commerce Export Hub (ECEH) infrastructure for operations, subject to operational readiness and available capacity of such facilities.
