India eases online exports by letting e-commerce firms sell MSME goods abroad

India has operationalised the Inventory-based Cross-border E-Commerce Export Framework under the Foreign Trade Policy (FTP), 2023, paving the way for e-commerce companies to buy goods from Indian businesses and export them overseas.The framework follows the amendment to the FDI policy through Press Note No. 3 (2026 Series), which allows inventory-based e-commerce operations only for exports. It sets out the rules for such exports while including safeguards to protect Indian sellers.Under the framework, eligible e-commerce companies can carry out export-only inventory operations through a registered Exporter-on-Record (EOR). The EOR will buy goods from Indian Sellers-on-Record (SORs) against confirmed overseas orders, export them in its own name and take responsibility for customs clearance, export documentation and compliance with regulations in the destination country.The arrangement allows Indian manufacturers, traders and MSMEs to sell to overseas customers without having to manage export paperwork, customs procedures, product testing and certification, packaging, labelling, logistics or returns. These responsibilities will be handled by the EOR, helping reduce compliance costs for smaller businesses.The Commerce Ministry said the framework includes safeguards to ensure the benefits of e-commerce exports flow to Indian manufacturers and MSMEs while maintaining regulatory oversight. E-commerce firms can procure goods only against confirmed export orders, preventing speculative inventory build-up. Export inventory must be separately identified, digitally tracked and cannot be diverted for sale in the domestic market.The framework also requires timely payments to Indian sellers within the prescribed timeline, regardless of when overseas buyers make payment. Export rebates and refunds must be passed on to Sellers-on-Record in proportion to the free-on-board (FOB) value of their goods. Sellers will also have visibility into the final sale price, order status and shipment tracking of their products.Any returned or rejected consignments must either be re-exported, returned to the seller or disposed of under prescribed procedures. The framework also mandates annual compliance certification and maintenance of digital records to strengthen transparency and enforcement.According to the government, the framework is aimed at increasing the participation of Indian manufacturers, traders and MSMEs in global e-commerce by giving them access to organised fulfilment networks while ensuring timely payments, transparency, efficient transfer of export benefits and strong regulatory oversight.Under the new system, MSMEs will continue to act as domestic suppliers even when their products are sold overseas through an e-commerce platform. They will be paid in rupees, while the e-commerce company will own the goods and export them.The Global Trade Research Institute (GTRI), however, questioned whether the FDI policy change was necessary. It said the arrangement is similar to the Directorate General of Foreign Trade’s existing export-house model, under which small businesses already supply goods to export houses for overseas sales.GTRI Founder Ajay Srivastava also cautioned that although the policy currently applies only to exports, it establishes the principle that foreign-funded e-commerce companies can own inventory. He said this could eventually lead to demands to extend the same model to domestic sales, allowing inventory-based e-commerce across the broader retail market.

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