Foreign etailers told to set up separate export-only units in India

The DGFT has 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

The government on Wednesday said foreign-owned retail ecommerce (ecom) entities such as Amazon and Walmart-owned Flipkart will have to set up separate legal entities in India to export Indian manufactured products through the inventory model. 

The Directorate General of Foreign Trade (DGFT) notified the framework after the industry department last month, via Press Note 3 of 2026 series, allowed 100 per cent foreign direct investment (FDI) in inventory-based retail ecom entities to export domestically manufactured goods.  

Press Note 3 pertains to FDI from countries sharing a land border with India. 

Under the new framework, the ecom firm must register the separate entity with DGFT as an Exporter-on-Record (EOR) with an Importer-Exporter Code (IEC) and Goods and Services Tax (GST) registration. Indian suppliers will be called Sellers-on-Record (SORs) with a compulsory GST registration, supplying only Indian-origin goods.  

Welcoming the move, an Amazon spokesperson said the policy will provide clarity on inventory-based ecom exports, supporting  the company’s efforts to exports goods worth $80 billion by 2030. 

“This policy clarity strengthens our vision of helping Indian businesses reach global customers. Importantly, this initiative empowers Tier-II and -III manufacturers to go global and establish Brand India on the world stage. We’re committed to supporting India’s export ambitions, working toward our $80 billion cumulative export target by 2030 — reflecting confidence in India’s manufacturing prowess,” they added.   

Under the order, ecom firms can only buy goods on receiving confirmed orders and not merely to build inventory for expected demand. Export goods must be kept separately, with digital links to the seller, overseas order, and export documents. 

The EOR can claim export benefits and is required to share this with sellers. This does not cover Advance Authorisation and Export Promotion Capital Goods benefits. EOR will also retain GST refunds, according to the order. 

The EOR will carry out all reverse logistics for returned or rejected consignments and cannot “under any circumstances” sell or supply these goods in the domestic market “whether directly or through any other person or entity,” the DGFT said. 

The ecom entity shall be responsible for maintaining records relating to procurement from the domestic seller, inventory status, and linkage with export documentation, the notification said. 

The ecom exporter may also utilise notified E-Commerce Export Hub (ECEH) infrastructure — designated physical zones for streamlining and accelerating cross-border ecom trade — for operations. 

Ajay Srivastava, founder of trade think tank Global Trade Research Initiative, said the new policy is broadly similar to DGFT’s existing export-house model, under which small firms supply goods to export houses for overseas sale. “Ecom firms were already free to use this arrangement, so a change in the FDI policy may not have been necessary,” he added. 

Spencer Cohen, principal and founder, High Peak Strategy LLC, said China’s export growth has shown how ecom platforms can serve as powerful conduits between small manufacturers and global consumers, providing the logistics, market intelligence, payments, and distribution capabilities that individual firms often cannot build on their own. 

“India is now moving in a similar direction where it has the potential to overtake China. By enabling inventory-based e-commerce exports of ‘Made in India’ goods, this reform can help thousands of small and medium-sized manufacturers overcome the fixed costs and complexity of entering foreign markets. It represents an important step toward broadening India’s exporter base and translating the strength of its manufacturing clusters into sustained global export growth,” he added.