India eases FDI rules for export-focused e-commerce

The Indian government has relaxed its foreign direct investment policy to allow e-commerce companies with foreign funding to own and manage inventory for the exclusive purpose of exporting goods manufactured or produced in India. The policy change, announced on July 23, 2026, marks a significant shift from a long-standing rule that prohibited FDI in inventory-based e-commerce models to protect domestic small traders.

The Department for Promotion of Industry and Internal Trade issued a press note stating that restrictions on the inventory-based model will not apply where entities are engaged exclusively in exports. The move is designed to boost outbound shipments, provide greater certainty to foreign investors, and improve market access for Indian manufacturers and micro, small, and medium enterprises through global digital trade platforms. The government aims to raise manufacturing's share of GDP to 25% by 2035 and increase merchandise exports to $1 trillion by 2030.

Industry experts say the reform will simplify compliance, reduce operational barriers, and enable faster delivery timelines for Indian exporters. Sectors expected to benefit include handicrafts, textiles, apparel,...